Why petrol, diesel prices were hiked after 4-year freeze? Why some cities saw steeper hikes than others?

Petrol and diesel prices were increased by ₹3 per litre on Friday after state-owned oil firms ended a four-year record hiatus in rate revisions. Petrol price was hiked to ₹97.77 per litre from ₹94.77 in the national capital. Diesel now costs ₹90.67 per litre, up from ₹89.67 previously, according to industry sources. The hike, however, varies across cities due to differences in local levies. People also ask AI powered insights from this story Petrol and diesel prices were increased by ₹3 per litre due to a sharp rise in global energy prices following the conflict in West Asia. State-owned oil firms ended a four-year hiatus in rate revisions as operations became financially unsustainable. In Delhi, petrol increased to ₹97.77 per litre and diesel to ₹90.67 per litre. In Kolkata, petrol rose to ₹108.74 and diesel to ₹95.13. Mumbai saw petrol at ₹106.68 and diesel at ₹93.14. Fuel prices vary across cities due to differences in local levies and value-added tax (VAT) imposed by state governments. State-run fuel retailers abandoned daily price revisions in April 2022 to shield consumers from soaring global oil prices, particularly after Russia's invasion of Ukraine. They incurred heavy losses during this period. Rising global crude prices reduce the profitability of state-run fuel retailers when pump prices are not adjusted accordingly. They have been absorbing part of the pricing pressure, leading to significant losses. According to the revised rates, petrol in Kolkata now costs ₹108.74 per litre, an increase of ₹3.29, while in Mumbai it rose by ₹3.14 to ₹106.68 per litre. In Chennai, petrol prices climbed by ₹2.83 to ₹103.67 per litre, a company executive said. For regular diesel, pump prices in Kolkata increased by ₹3.11 to ₹95.13 per litre. In Mumbai, diesel now costs ₹93.14 per litre, also up by ₹3.11, while in Chennai the price rose by ₹2.86 to ₹95.25 per litre, the executive added. One of the key reasons behind the hike is the sharp rise in global energy prices following the outbreak of the conflict in West Asia. Global oil prices spiked to more than $120 per barrel before easing to around $100-$105 a barrel following the near-closure and severe disruption of the Strait of Hormuz, triggered by the US-Israeli conflict with Iran. India is among the last major economies to raise retail fuel prices. State-owned oil firms had kept fuel prices unchanged for 11 weeks despite a surge in input costs, but passed on part of the increase once operations became financially unsustainable, sources said. Prices have remained frozen since April 2022, except for a one-off reduction of ₹2 per litre each on petrol and diesel in March 2024 ahead of the Lok Sabha elections. Union Petroleum Minister Hardeep Singh Puri had earlier hinted at a possible fuel price hike. Speaking at a Confederation of Indian Industry event in New Delhi on Tuesday, he said the government would eventually need to decide on revising petrol and diesel prices. His comments came shortly after Prime Minister Narendra Modi urged citizens to conserve energy and foreign exchange — an appeal he repeated on Monday. State-run fuel retailers IOC, BPCL, and HPCL had abandoned daily price revisions in April 2022. The move was aimed at shielding consumers from soaring global oil prices after Russia’s invasion of Ukraine. The companies incurred heavy losses in the first half of the 2022-23 fiscal year, which they later recouped when rates fell in subsequent months. However, the conflict in West Asia has once again pushed international oil prices higher, with crude surging by more than 50%. Sanchari Ghosh is an Assistant Editor at Mint with over 12 years of experience in journalism, specialising in personal finance, DLT & DeFi, geopolitics and foreign policy, with a particular emphasis on how these areas intersect. <br> She writes extensively about how money works in everyday life—helping readers navigate personal finance decisions. <br> As AI reshapes investing behaviour, capital is increasingly flowing into decentralized ecosystems, redefining how assets are managed, traded, and valued. 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