Brent Dips Below $100/BBL, Petrol Surges Above ₹100, Diesel Crosses ₹95. Brace For Higher Inflation?

Added: 2026-05-25

[00:00:03]Hello and welcome. You're watching Business Today television. I'm Sakshi Batra. Petrol and diesel prices have been hiked for the fourth straight time.

[00:00:10]In these last 10 days, we have seen on May 25th, the latest tranch has actually seen petrol prices being hiked by 2.61 rupees per liter. The deal diesel prices have been hiked by 2.71 rupees per liter. And these hikes are applicable with immediate effect across the country starting today. Remember this is despite the fact that crude oil prices have slipped to two week lows today and uh this is amidst the easing tensions between US and Iran and Brent crude prices have also seen falling below $100 a barrel as well. But today's this fourth cut has taken the fourth high that has taken the cumulative rise in petrol and diesel prices to nearly 7.5 rupees per liter surge that we have seen with all these revisions that have taken place. So in Delhi today petrol prices have uh now gone up to after 22 2.61 rupees per liter high to 102 uh rupees per liter. This has crossed the 100 rupee mark. Now that's the psychological level that a lot of commuters would face uh uh you know uh you know trouble with.

[00:01:12]Of course we've seen diesel prices increase again by 2.7 rupees now heading above 95.2 rupees per liter as well. And most of the industry officials continue to believe that there could be further hikes also coming in. So let's try and decode for you what this fuel price hike really means. What are the oil experts and the economy experts really saying on this hike? Let us welcome a panel of our experts joining in on this session. We have Mr. Arish Sharma, former chairman OMGC joining in on the panel. Good morning to you sir. Rajni Sa chief economist K Ratings is with us. Warm welcome to you ma'am. We also have Anish Day, global head energy, natural resources, chemicals, KPMG joining in to decode for us what this hike means. I'll start off with you Rajni um and try and understand are you already penciling in uh you know in your inflationary numbers uh that a sharp spike because of these constant fuel price hikes?

[00:02:08]Uh yesi we have penciled in in our inflation projection. Now with the cumulative hike of around uh 7 and a half rupees that we have seen in the last month or so uh the direct impact of that on inflation is going to be around 35 basis point and then not to forget the indirect impact of this on inflation. So overall we have raised our inflation projection for FI27 to around 4.6 6 to 5%. Uh and I would say there's higher chances of it being around 5%.

[00:02:43]And not to forget that we are still going through very uncertain times and there are chances of while crude oil prices have gone down now but going forward we could see prices global prices again flaring up with implications of uh prices in the domestic market.

[00:02:59]>> Okay. Anish coming to you. Um you know economists are already penciling in the impact of these fuel prices but I think the common man will ask this question while the crude oil prices are ebing lower why the price hike is so steep.

[00:03:12]>> Well the crude oil prices have gone up 70%. I mean leave this today's reduction after these seemingly positive trends in the talks between US and Iran but they we're up 70%. Whereas even if you look at the cumulative increase which is coming it's about 7 8%. So there's a big gap still there and uh while it doesn't translate percentage for percentage but there clearly the Indian increases have been the lowest amongst any comparable economy. So while I know and I feel for everybody who is being impacted by the increases we still need to remember uh that there's still a gap to cover.

[00:03:54]>> There's still a gap to cover. Hold that thought. I'll come to you shortly but let me take a word uh from the most experienced person that we have on the panel in terms of the various oil cycles that he's uh looked at Mr. Paris Sharma uh you know you have probably seen this happen in last three to four times in the economy when we have seen recessionary scenarios and the impact on the crude oil prices in various inflationary scenarios wars uh you know various economic crisis. Give us an understanding of how are you looking at the current crisis and the impact on fuel prices vis all those previous where are we at how would you judge that?

[00:04:33]Well, first of all, Sak Sakshi, thank you for inviting me on your show and uh these days I learn from the youngsters.

[00:04:43]I see Anish, he's a renowned economist time and again. Uh for me it is a 15 years I have retired from OGC but thereafter number of occasions I have an interaction. So he had summed up quite like >> right I think there is some connection issue we'll come back to you but Anish since he was talking about you as well give me an understanding the gap that you still feel that oil marketing companies still have to cover will they cover it >> that time $147 a barrel was the price >> okay I think Mr. Arish Sharma is back with us uh Mr. Sharma we had lost your audio completely so we could not hear you at all. I think there is some power outage which has really led to I think the you know the power outage at your place. Uh but can if you can hear me may you continue and I'll come back to Anish with a follow-up question then.

[00:05:41]>> Yes. Yes. Sakshi go on.

[00:05:44]>> Yes sir. Please go on sir. We can now hear you.

[00:05:47]>> Yeah. Yeah. The issue is uh now currently the prices have gone up to about $1205 a barrel and uh 3 months back they were ranging in around $70 a barrel. Firstly compliments to this government that they have insulated the consumer for almost 3 months and I will not go into the politics.

[00:06:14]Everybody knows >> sure >> why the prices were not allowed to be raised but that that has been happening for decades. I have seen that >> but it is now imminent because this oil marketing companies I find they are sustaining the economy. They are sort of shock absorbers for the economy. They are under lot of pressure unless they are proper oiling is done they may collapse.

[00:06:40]I'm seriously worried of that. So whatever these relief being given this is uh again not enough uh much more has to be done and more measures need to be taken how these companies uh will be able to recover the under recoveries that is a big question and if they are not allowed companies are bleeding uh they may collapse so that be more worrisome situation for the country these three companies IOC HPC BPC they have been sustaining ing the economy I have seen for the last three decades. So they desperately need this relief and that is what being given by the government as of now not in a single dose it is being given uh in uh you know small small doses so that consumer doesn't feel the pain or let it go but it is inevitable. Consumer has to prepare for more increases to come. the government has to create the awareness program uh that that it is imminent. So uh I see nothing uh abnormal in these price increases.

[00:07:54]>> Okay, got that. So these are the need of the hour and more needs to be done as Anish was also pointing out. Anish we were talking about how about 14 rupees a liter is the under recovery for petrol and upwards of 40 rupees per liter for diesel. So do we expect then that this entire gap will be fulfilled? Already 7 and 1/2 rupees has been passed on to the consumers. What's your expectation?

[00:08:22]>> So uh the government has cut down excise duties. So that's already created a cushion. Also we must remember that there were uh certain amount of excess recoveries in the past because while the crude prices had moved down uh the pump prices had moved not moved down in the past. So there was a cushion over there.

[00:08:39]So we using up all of that cushion and then we are now looking at further increases. I'll just add a little perspective to why uh the price increases are are of significance beyond the oil company recoveries and the fiscal situation. See there are three things which happen. First is that you are signaling to conservation and uh just as a rule of thumb if we conserve or if we reduce our uh crude usage by about 5% we save 100,000 crores every year. This is the situation where we are in and that's a significant amount of money and that saving actually translates into a better uh rupee the strength of the rupee the fiscal deficit all of that the company uh things so there is a signal for conservation which is coming through some of these there's a signal for efficiency also because you will the more uh dearer it gets you will look at efficiency and then the third part is substitution where you have to go away from crude and look at electricity applications and so on so I Don't think we should always look at it from a narrow lens of recovery of the oil companies which anyway is a problem but also look at the broader objectives which some of these will have to serve.

[00:09:51]We cannot have a unsustainable situation of heavy dependence on crude imports forever.

[00:09:57]>> That's the major pain point at this point in time. Let me bring in Rajni here. Rajni, I think uh the West Asia crisis has clearly brought about this energy crisis situation, security concerns that the government is now waking up to um you know bigger and better focus coming in ever than before after this West Asia crisis and the state of Hormus which has choked uh you know the supplies for a lot of countries like us that are heavily dependent on imports from that area as well. Um just like how Alish is pointing out that you know perhaps uh the kind of imports that we are dependent on 80 to 90% of imports on oil uh and even natural gas from abroad that's something that needs to be catered to in case we need to have a more sustainable picture on the crude oil prices on the fuel prices back home for the common man in India. What is your own perspective? What needs to be done then?

[00:10:54]So uh Sakshi I agree with that because if the prices are artificially kept low then we are not taking care of the demand part at all and then this will lead to imbalances at other places. uh one we have been dis uh discussing the under recoveries of OMC's also it will uh have put a burden on government finances and that's something which we should be wary of because before this crisis uh actually at least center had been very beautifully doing fiscal consolidation yes and cent's fiscal deficit had moved from a high that we had seen during co to around 4.4% 4% in the budget and and it was budgeted to move down even lower to 4.3%. Now all that is getting going to get disturbed.

[00:11:45]Uh government has already announced excise duty cut and there is going to be a fiscal burden cost of that and we have estimated the fiscal cost of the west Asia crisis uh as of now at around 0.5% of GDP. uh this takes into account the excise duty card, the higher subsidy burden, the lower tax revenue collections expected. So in that sense um what I'm trying to say is that the burden the government should look at sharing the burden between households OMC and government. So they are not going to pass on that entire increase to households which is okay because they want to ward off the households from very high inflation number. they are concerned about growth aspects but yes having said that some part of it has to be the burden has to be shared with households because that will ensure that the burden is not too much on government or the OMC's so in that sense it's the right step to be taken >> okay before coming to Mr. Sharma his connection is just getting stable. I'll come to you Anish and I will ask you this. Um you know it's the center aspect, the states aspect which have the VAT and the OMC's largely that are absorbing a large part of this cost at this point in time or which contribute to the overall figure that a common man pays for the petrol like you know the 102 rupees per liter will have a share for uh the OMC's will have a share of center and will also have the share of the states. Where do you think this can be distributed going forward?

[00:13:17]So it's it's more or less we are going to see um the center absorbing a fair amount of some of these things because that's where you know the state's fiscal situation is such that you know there's not a massive amount of room in most of them uh to absorb uh a lot of that and Raji can speak more about that. uh central government is also the the in the politics of the things I think the central government is in the in the worst situation in in terms of indicating to the consumers about the responsibility you know it it's a fair amount of responsibility devolves >> so I suspect there'll be a lot of trepidation to raise it very sharply to the extent that maybe economists will say that it is needed uh but yeah the burden sharing will happen the oil marketing companies are in for a tough year very very clear this year irrespective.

[00:14:09]Yeah. And also you must remember that this crisis is not over even if we have an agreement the whole system take many quarters several quarters to come back to some normaly. So and then there will be a challenge there.

[00:14:21]>> One quick point I would want to talk about the strength of the Indian uh oil system because we have a massive amount of refining capacity and flexibility in the capacity. We have been able to do a lot of that. I don't think the oil companies get credit for that. But there is something which has warded off a worst uh situation on the pain which many other countries in South Southeast Asia are seeing and that's why you have 30% increases even% already. So so I think 7 8% in India is know somebody's called the Indian uh situation as a pampered uh situation. I think that's a extreme characterization but at the same time you know it it directionally shows that we have been protected a lot more than what other countries have been.

[00:15:07]>> Okay I'll come to Mr. Arish Sharma on that uh and as a response do you have your uh you know experience share a bit on the same uh what Anish mentioned here uh Mr. Sharma also could you give us an understanding um in your own experience whenever we've seen such price hikes happen um you know is the higher level then seen as a normal so in this case do we see a normal level of petrol and diesel around 95 to 100 rupees a liter will that become normal uh will we ever get to go back to 80 85 you know or is it done and dusted to prepare ourselves for higher elevated levels Dakshi I have seen this product prices ranging constantly in three-digit level in fact I'm curious none of my two young panelists have spoken on that especially I would like to ask Anish Anish you have seen in the past firstly let us all all of us realize this is unprecedented abnormal situation and I feel such abnormality has to be tackled with abnormal decisions.

[00:16:20]I have seen that happening in the past.

[00:16:23]Earlier when these kind of situations came, these abnormalities got staggered over the next four, five, six years in the form of government issuing oil bonds to all marketing companies. they were able to you know that uh get that uh finance from the banks and they were able to sustain their operations liquidity and fortunately today Indian banking sector is perhaps the strongest so that as we say poverty has to be equitably shared. Why not uh pass on some of the burden through this route to the the banking system? Let these marketing companies why they should continue to bleed? Let them be given the support and this oil bonds can be issued for five years, 6 years whenever the government thinks that can be the staggered and as a result the immediate pain uh will get shared in the future years in a equitable manner. I don't know why nobody's none of the economist none of the newspaper none of the news channels is talking on that. So since I see Anish day here I have cornered him many times in the past also in various debates. So I do not know Rajni as well but Anish what is your take on that?

[00:17:48]>> We have two economists we have both Rajni and do you want to respond to that?

[00:17:52]>> We have a realist Rajni and industry.

[00:17:56]Yeah. So, so I I'll give a first uh view on Saki's question on whether we are in this in the for the long haul. And I think the answer is yes. The reason is that we have a problem which had a start date but we can't still see the end date. Even if we have some kind of resolution, it's only for you know discussions for next 60 days and trying to get that and even to get to that point it's uncertain. So the markets have reacted positively but the reality is that there's a lot of ground to cover. Then there will be a recovery period for just things to get to normaly which as I said will take several quarters and then finally you will have the financial system or the or the the the balance coming through over even further time period. So we are in to this for the long haul. It's very hard to see how you know if prices go down immediately everything the the pump prices will go down and I think there's an importance of communication around this to the consumer. We must take the consumer into confidence for some of these and explain this in better terms than we currently possibly are doing.

[00:18:57]But to Mr. Sharma's question, I think you will already see the inflationary impacts uh of this and Raji has called out that and potentially you know as as time passes we'll see whether that's the full amount or there's there's going to be more but the banking system is going to struggle to raise this RBI you know it will be very very cautious about raising the the rates and then there will be certain amount of transmission to the banking system I'm not an expert on that maybe Raj can talk about that more but I don't see that the system will be completely insulated from uh these changes. Rajni.

[00:19:37]Uh so yeah I agree with Anish uh you know even if while the crude oil prices have come down uh right now uh but it could again flare up even if we you know even in the best case scenario even if we have a resolution ready in the next few days still we do not expect crude oil prices to fall much we would still see it we have kept the average at around $90 in our projections even in the best case scenario uh because they will always be this uncertainty as to what to expect going forward. Could there be further disruptions going forward and also the fact that a lot of damage to the supply has already been done. So it's not that all of that will immediately start coming to the market.

[00:20:21]So yes, we have to be uh be prepared for higher crude oil prices going forward.

[00:20:28]uh as far as uh sharing of the burden is concerned I think it's very much required that government doesn't share a high burden themselves because eventually that would kind of again distort the fiscal consolidation path which anyways will get disturbed because of the west Asia crisis but but still the government should see to it that it's not distorted much and they should let some of the price increase go to the households because it's very important that the households are also aware of the uh global reality. If the global crude oil prices are high, households have to see what do they do about their consumption. How do they take care of it? So some part of it yes will be shared by OMC's and government but households should also be prepared for bearing some of the pain which they will be doing now. And uh thirdly as far as the uh interest rates are concerned uh I feel in the latest policy in the upcoming policy I think the MPC will still be on hold. Uh there is no denying that inflationary concerns are there and in fact it's going to get could get aggravated going forward because we are also concerned about El Nino and the impact of that on food inflation. So inflationary concerns are there but I feel that RBI probably in the upcoming policy they would like to wait and watch for few more months as to what kind of data we get how this crisis gets resolved uh what is the implications of that on growth and inflation. So a hold in the upcoming meeting but going forward towards the end of the year there are high chances of a rate hike going forward. there are high chances of rate hikes going forward. Although in the current policy there could be a hold is what Rajni clearly expects there. Uh last word from you both Anish and Mr. Sharma very quickly. We just have about 2 minutes on the show. Anish I'll come to you first and then to Mr. Sharma.

[00:22:28]>> Yeah I think um we just need better communication around all of these things. See these are external realities. We didn't wish the war it's not on our borders but the impact disproportionately on us. I think the communication has to become much much stronger. These drips of increases are you know to make it more palatable but we know that there's still an uncovered gap there. So the communication has to be much more stronger towards conservations towards efficiency towards substitution and in general the consumer bearing fair amount of the the share because otherwise the system will collapse.

[00:23:04]>> Okay Mr. Sharma to you the last word sir.

[00:23:07]Well, I I would say both the youngsters have smartly evaded my questions to them.

[00:23:14]But but let me tell you the pain is not yet over and recoveries are still very high. And what about the losses? They have suffered. They have to be covered up.

[00:23:25]>> I'm not very comfortable with the the current state of affairs and current uh you know small doses of relief being given to all my credit. is something much more needs to be done. I think uh I'm also running short of time. Uh Sakshi, you are also short of time. May I exit please?

[00:23:46]>> Absolutely sir. Well, thank you so much Mr. Sharma. Thank you Anish and thank you so much Rajni for sharing with us your thoughts there. Clear focus is that one we have to be prepared for much higher prices for longer duration. It is an external situation which we do not have control over. uh the West Asia crisis. It was not our war but we have been disproportionately impacted as well. When we look at the impact that these rising fuel prices will lead to, yes, you have to be prepared for higher inflation. Economists are penciling in a 35 basis points impact on inflation uh direct as well as there will be an indirect impact as well. you will now see a lot of other industries start to raise prices and that will also further lead to uh inflationary scenario and there will be an impact in terms of interest rate hikes also going forward.

[00:24:36]What Anish has clearly pointed out this hike is still not enough. There is a gap to be filled up and there will be uh you know hikes even going forward as well.

[00:24:45]Thank you so much viewers for being with us on this special edition but do stay tuned much more action on terms of markets and coverage on the other side.

[00:24:51]Stay tuned.