Indian state refiners raise retail gasoline, diesel prices as high crude costs bite

Indian state refiners on May 15 raised prices of gasoline and diesel by Indian Rupees 3/liter with immediate effect, senior officials at Indian Oil Corp. and Hindustan Petroleum Corp. said, as energy companies look to recover some of the losses from surging global crude prices.

"The price rise will take effect from today [May 15]," the IOC senior official told Platts, part of S&P Global Energy.

"We have also raised the price by Rupees 3/liter from Friday. The effective rise will be few paisa here and there, depending on different provincial taxes in different states," an HPCL official said.

Petroleum Minister Hardeep Singh Puri said May 10 that oil marketing companies were importing crude oil, gas and LPG at higher costs but were selling final products in the retail market at relatively lower prices to shield consumers, resulting in mounting losses of Rupees 10 billion per day ($105 million).

Surging crude oil prices

Oil prices are still more than 45% higher than levels seen before the start of the Middle Eastern conflict, though they have eased a bit in recent days. Crude oil futures settled slightly higher on May 14 amid US-China talks as traders looked for signals of the possibility of a restart in military exchanges between the US and Iran. NYMEX June West Texas Intermediate crude settled up 15 cents/barrel day over day at $101.17/b, while the July ICE Brent futures contract settled 9 cents/b higher at $105.72/b.

On May 10, Indian Prime Minister Narendra Modi said the country should reduce gasoline and diesel consumption through measures such as remote work and virtual meetings, as rising oil prices were placing significant pressure on foreign exchange outflows.

"The retail price hike is very small relative to the crude price surge since the Middle East conflict started. This is unlikely to make any dent on oil products demand. Because of some of the recent changes to excise duties, some of the price shock will be absorbed by the government, instead of getting passed on to the consumer. The real drop in demand will come only if the government and companies implement partial working from home," said Premasish Das, executive director for oil analytics at S&P Global Energy CERA.