Form the Editor’s Desk

April 29, 2026

As the Strait of Hormuz remains shut for nearly two months due to the Israel-U.S.-Iran war, crude oil prices have climbed by over 80%. India’s four-year freeze on domestic fuel prices may no longer be sustainable, with the state-owned companies mandated to hold those prices down already recording losses at a scale that points to a deepening profitability crisis.

The damage is already visible in the quarterly accounts. Profit after tax at India’s three state-owned fuel companies, which are Indian Oil, Bharat Petroleum, and Hindustan Petroleum, fell by 82% in the March quarter, according to ICICI Securities, even before crude import prices climbed to $120 per barrel this month, according to Reuters.

Analysts at Kotak Institutional Equities estimate that a correction of 25 to 28 rupees per litre is now required to restore viable margins, according to the newswire. At current pump prices of roughly 94 to 106 rupees per litre depending on the city, that represents an increase of between 24% and 30% in a single move. Food prices in India are closely tied to transport costs, and a hike of that scale would feed into the cost of moving vegetables, grain and goods from production centres to markets within days.

The figure fed rumours that the government was holding prices down only until state assembly elections concluded, and would raise them sharply once polling ended on April 29. It triggered panic buying at petrol pumps in several parts of the country, with long queues reported in Andhra Pradesh among other states.

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The government had already moved on March 26 to absorb some of the pressure, cutting the special additional excise duty on petrol from 13 rupees per litre to 3 rupees, and removing the duty on diesel entirely, according to media reports. The oil ministry’s joint secretary made a public appeal on April 28 for citizens to avoid panic buying and not believe rumours, saying there was no plan to raise pump prices.

That assurance rests partly on a supply position that the government says is secure. India’s oil ministry has confirmed sufficient crude stocks for the next 60 days, with all refineries operating at over 100% capacity, according to reports. India has also secured some diplomatic access through the blocked strait, with Iranian authorities allowing Indian-flagged tankers to transit under coordinated arrangements, and nine ships having crossed successfully by March 20, according to reports. Indian refiners have additionally begun buying crude from Russia and other suppliers outside the Gulf to reduce dependence on Hormuz-linked routes.

However, the grade of oil that India typically imports is now trading at $111 per barrel, according to Trading Economics, with heating oil and refined fuel costs also surging. The pressure is not confined to crude alone, meaning the price shock runs through every stage of the supply chain before it reaches the pump.

Further, the Federation of Indian Airlines, whose members include Air India, IndiGo and SpiceJet, has warned that some carriers are on the verge of shutting down, citing what is known as the crack spread on jet fuel, as reported by The Hindu. The crack spread is the margin a refinery earns for converting crude into aviation turbine fuel, and it has surged from a normal range of $11 to $18 per barrel to over $130 per barrel, according to the federation. This means that even if crude prices were to ease, jet fuel would remain punishing unless refinery margins compress separately.

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Reliance Industries, which runs the world’s largest refining complex at Jamnagar and sells most of its output in export markets rather than domestically, reported what it called “unprecedented” supply disruptions in its March-quarter earnings, according to Reuters. A private company with no obligation to hold prices down has still taken a significant hit, which gives some measure of how severe the disruption has become for everyone in the supply chain.

A decision by the UAE compounds the uncertainty. It announced on April 28 that it is leaving OPEC, the oil producers’ cartel that coordinates output levels among its members to manage global prices, with the exit taking effect on May 1, according to The Indian Express. The UAE produces roughly 3 to 3.2 million barrels of oil per day, and outside the cartel it will be free to produce and sell as much as it chooses. Whether it uses that freedom to pump more oil into the market, which could ease prices, or to find ways to move its oil around the blocked strait to buyers willing to pay a premium, will have a direct bearing on how much India pays for its imports in the weeks ahead.

The crisis also carries a risk that goes beyond fuel. Over 30% of the world’s urea, the fertiliser on which Indian farmers depend for crop yields, is exported from Gulf countries through the Strait of Hormuz. A prolonged closure threatens not just what Indians pay at the pump but what they pay for food grown within the country, adding an agricultural dimension to what has so far been discussed primarily as an energy problem.

A fuel price hike of the magnitude that Kotak estimates would push up the cost of transporting goods, feeding quickly into food prices and the general cost of living. The Reserve Bank of India, which is mandated to keep inflation between 2 and 6%, would then face pressure to raise interest rates to cool prices, a move that would make loans more expensive for businesses and households at an already difficult moment.

The government’s assurance that pump prices will not rise may hold for now. If a correction does come later, the question will be whether it arrives in one large step or is spread across several months in smaller increments. A phased increase would soften the blow for households. What the government decides, and when, will likely depend as much on the trajectory of the war and oil prices as on its own fiscal calculations.

You have just read a News Briefing, written by Newsreel Asia’s text editor, Vishal Arora, to cut through the noise and present a single story for the day that matters to you. We encourage you to read the News Briefing each day. Our objective is to help you become not just an informed citizen, but an engaged and responsible one.