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Will petrol and diesel prices go up after the completion of Assembly elections in four states and one Union Territory? Are government-owned oil companies preparing to hike fuel prices once the elections are over?

Speculations around a possible increase in petrol and diesel prices are rife again. In view of the Assembly elections in four states and a Union Territory, the government and state-run oil companies have, for now, avoided passing on the burden of higher fuel prices to consumers.

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Brokerage firm Kotak Institutional Equities has flagged the possibility of a price hike. According to the firm, there has been no progress towards peace or any agreement in West Asia so far. In such a scenario, petrol and diesel prices may be raised once the elections conclude in these states.

Hormuz crisis fuels price fears

Brent crude oil is currently trading at around $103–104 per barrel. The Strait of Hormuz remains closed. With no peace agreement with Iran, the United States has imposed a blockade in the Strait of Hormuz by deploying its naval ships. The importance of this route can be understood from the fact that about 20% of global oil consumption passes through it daily. For India, around 40% of its crude oil supply comes via this route. Additionally, India imports about 56% of its LNG and 83% of its LPG through the Strait of Hormuz.

Kotak Institutional Equities believes that refining companies are facing significant losses due to the surge in crude oil prices. These companies are bearing a burden of nearly Rs 27,000 crore every month. To offset these losses, a price hike is seen as necessary, which could also help moderate demand. The firm estimates that if there is no de-escalation in West Asia by April 29, when the Assembly elections conclude, petrol and diesel prices could be increased by Rs 25–28 per litre. Such a hike could deal a severe blow to consumers. Higher diesel prices would increase transportation costs, making vegetables, milk, and essential household items more expensive. It would also raise costs for school transport as well as personal travel, including two-wheelers and cars.

Centre refutes fuel hike claims

However, following the report’s release, the central government and the Petroleum Ministry moved swiftly to respond. The government dismissed reports suggesting petrol and diesel prices may be hiked by Rs 25-28 a litre soon after Assembly elections, saying there is no such proposal under consideration.

“There are some news reports suggesting a price hike of petrol and diesel. It is hereby clarified that there is no such proposal under consideration by the government,” the Ministry of Petroleum and Natural Gas said in a post on X. The ministry said such reports are “designed to create fear and panic amongst the citizens and are mischievous and misleading. In fact, India is the only country where petrol and diesel prices haven’t increased in the last four years,” it said.

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However, data shows that despite a decline in global crude prices in recent years and discounted imports from Russia, consumers did not receive corresponding relief. Between FY2020-21 and the first nine months of FY2025-26, the Centre collected Rs 17.81 lakh crore in excise duty on petroleum products, making fuel a significant revenue source.

(This article was originally published in The Federal Desh.)