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With crude oil prices on fire in the global market, Indian consumers will have to be prepared for another big shock in fuel prices in the coming days. According to the latest report of rating agency CRISIL, oil companies may increase the prices of petrol and diesel by additional ₹ 2.50 per liter in the coming times to reduce their huge losses.

Let us tell you that in just a few days from May 15 till now, the prices of petrol and diesel have already increased by a huge amount of about ₹ 7.50 per liter in the country. CRISIL clearly says that if the prices of crude oil in the global market continue to skyrocket like this, then the oil companies can take this total increase to the figure of ₹ 10 per liter, which will completely disturb the budget of the common man.

How did prices increase in just 10 days? The whole game of oil companies

Oil companies have had a big impact on the pockets of the general public by increasing prices bit by bit under ‘Daily Price Revision’ i.e. daily review of prices. If we understand this oil game in terms of dates, then on May 15, there was a big increase of ₹ 3.00 in the prices of both petrol and diesel. After this, on May 19, the price of petrol and diesel was increased by 90 paise more. Even before the relief was received, on May 23, an additional burden of 87 paise on petrol and 91 paise on diesel was imposed. After this, again on May 25, petrol became costlier by ₹ 2.61 and diesel by ₹ 2.71. Thus till now, there has been a huge increase of ₹ 7.38 (about ₹ 7.40) per liter in petrol and ₹ 7.52 per liter in diesel.

What will be its direct impact on retail inflation?

This recent increase in fuel prices by ₹7.50 will directly increase our retail inflation by 36 basis points i.e. 0.36%. At the same time, if due to international pressure this increase touches the figure of ₹ 10 per liter, then its impact on the country’s retail inflation will increase to 48 basis points i.e. 0.48%. The simple fact is that due to cost of fuel, the cost of transportation, logistics and manufacturing will increase, due to which all the everyday things are sure to become expensive in the coming months.

Increase in freight charges will completely spoil your kitchen budget.

In India, about 71% of the freight transportation i.e. supply chain is completed through road transport i.e. trucks. The surprising thing is that diesel alone accounts for about 42% of the total expenses of truck and logistics operators. In such a situation, due to diesel becoming expensive, freight charges will directly increase, which will have a direct impact on our plate.

This will have the biggest impact on the prices of dairy products (milk, curd, cheese), tea, coffee, fresh fruits, vegetables, pulses, spices, eggs, meat and fish. On the other hand, non-food items will also become costlier, such as clothing, consumer electronics (TV, fridge, washing machine), wood products, cement, ceramics and construction materials. All these industries are heavily dependent on transport. To compensate for this increase in costs, companies will either increase the prices of their goods or reduce the size of the packets to protect them from the eyes of customers.

Why is there such a huge increase in fuel prices?

The main reason for this uncontrolled growth is the military conflict between America and Iran. Before the start of this war, crude oil which was running comfortably around $70 per barrel in the international market, has now crossed $100 per barrel. The average price of crude oil in the first two months of the current financial year 2026-27 has been $112 per barrel, which is much higher than CRISIL’s full year estimate of $95 per barrel.

However, customers are definitely getting some relief due to the GST cut made by the government on electronics, automobile and FMCG products in September 2025 last year, but the increasing cost of oil is bent on neutralizing this relief. The only matter of relief is that the current inflation rate still remains within the satisfactory range of 2-6% i.e. tolerance band of the Reserve Bank of India (RBI).

How is the price of oil decided before it reaches you?

After adding many different levels of taxes and expenses on the base price of crude oil, it reaches your vehicles from petrol pumps. First comes crude oil (Base Price), because India imports 90% of its crude requirement from outside, the price of which is decided by the dollar and the international market. Next comes refining cost, which includes the companies’ cost of refining crude and their own profits.

Then the central government imposes excise duty i.e. excise duty and road cess on it, which is uniform in the entire country. After this, the fixed dealer commission received by the petrol pump owners is added. Lastly, state governments impose local sales tax i.e. VAT as per their discretion. Since the VAT rates of every state are different, the rates of petrol and diesel also appear different in different cities like Delhi, Mumbai, Lucknow or Patna.