India's Fuel Market Shifts: Nayara Hike Amid State-Owned Firm Stays Frozen

Nayara Energy Raises Petrol and Diesel Prices Amid Global Oil Surge​

New Delhi, March 26 – Nayara Energy, India’s largest private fuel retailer, announced a price hike of ₹5 per litre on petrol and ₹3 per litre on diesel on Thursday, citing the impact of recent global oil price increases stemming from the conflict in the Middle East. The move reflects a growing challenge for private fuel marketers as state-owned companies maintain frozen retail prices.

Price Increases and Market Dynamics​

Following the United States and Israel’s military actions against Iran in February, triggering a strong response from Tehran, international crude oil prices have seen a substantial rise. This has led to a significant increase in input costs for fuel retailers. Nayara Energy, operating 6,967 of India’s 102,750 petrol pumps, has responded by passing on a portion of these increased costs to consumers.
Currently, petrol at Nayara pumps costs ₹100.71 per litre and diesel ₹91.31 per litre. The company stated that the disruption in crude oil supplies has presented unprecedented challenges, impacting distribution and availability. It assured customers of a consistent supply of high-quality fuels and highlighted the ongoing refinery turnaround to maintain supply stability.

Competitive Landscape and State-Owned Control​

Jio-bp, Reliance Industries and BP Plc’s fuel retailing joint venture, has refrained from raising prices despite incurring significant losses. State-owned fuel retailers, controlling approximately 90 per cent of the Indian market, continue to maintain frozen retail rates, absorbing losses when crude prices are high and capitalizing on lower rates when available.
Private fuel retailers, like Nayara Energy, majority-owned by Russia’s Rosneft, do not receive government compensation to offset losses, unlike state-owned firms. Mounting losses have left them with limited options but to increase retail prices. The effective price increase varies across states due to local taxes such as Value Added Tax (VAT), with some areas seeing increases as high as ₹5.30 per litre for petrol.

Premium Grade Price Adjustments​

The three state-owned fuel retailers – Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) – recently increased the price of premium petrol by ₹2 per litre and the rate of bulk diesel sold to industrial users by approximately ₹22 per litre. However, the price of normal petrol and diesel remains unchanged.
In Delhi, premium 95-Octane petrol prices have risen from ₹99.89 per litre to ₹101.89, while bulk diesel prices have increased from ₹87.67 per litre to ₹109.59.

Global Oil Price Trends​

International oil prices touched USD 119 per barrel earlier this month due to the intensifying Iran conflict, subsequently decreasing to around USD 100 a barrel. India imports 88 per cent of its crude oil needs and approximately half of its natural gas requirement, primarily through the Strait of Hormuz. Following the US and Israeli attacks, Iran warned against shipping through the strait, and insurers withdrew coverage, effectively halting tanker movements.
Oil prices reached USD 119 per barrel in June 2022 following Russia’s invasion of Ukraine. In FY24, the three fuel retailers recorded a combined profit of ₹81,000 crore, partially offsetting previous margin dents. This year, the companies have reported a profit of ₹23,743 crore in the December quarter alone.
The government maintains that petrol and diesel are deregulated commodities, with pricing independently determined by oil marketing companies.