India has absorbed much of the shock from a 70% rise in global crude oil prices by passing on only a fraction of that increase to consumers, according to Anish De, Global Head for Energy, Natural Resources and Chemicals at KPMG International. Speaking on 23 May, De said the government has maintained stable fuel availability nationwide, backed by strong refining capacity and uninterrupted supply chains.

The Price Gap: What Consumers Paid vs What Crude Did

Petrol and diesel prices in India rose by approximately ₹5 per litre in recent adjustments — a modest increase relative to the near 70% surge in international crude benchmarks. De attributed this gap to the structural lag between global crude movements and domestic retail price revisions.

'The recent hikes came several weeks after crude prices increased. There is still a significant gap in cost recovery,' he said. He added that roughly 25% of the losses have been covered through recent price increases, while the remaining 75% continues to be absorbed by oil companies — pointing to sustained under-recovery in the fuel pricing system.

Supply Remains Stable Despite Volatility

De was emphatic that India faces no fuel shortage at either the wholesale or retail level. 'There is no shortage of crude availability in global markets, and India has sufficient refining capacity. Supply is not an issue,' he said. When asked about reported outages at some retail fuel outlets, De clarified he was not tracking those operational specifics and said such details are best addressed directly by the oil companies concerned.

Further Price Hikes Cannot Be Ruled Out

Looking ahead, De cautioned that additional retail price increases remain possible if global crude stays elevated. 'If oil continues to stay high, there is every possibility of further hikes,' he said. He described the bulk of cost recovery as still pending, adding that pricing decisions ultimately rest with the oil companies rather than the government. On the question of a potential rollback should crude moderate, he maintained that 'a lot of pent-up recovery is still pending' — suggesting companies would be unlikely to reduce prices quickly even if global benchmarks ease.

GST on Natural Gas Should Come Before Petrol, Diesel

On the policy front, De argued that bringing natural gas under the Goods and Services Tax (GST) framework should take priority over extending GST to petrol and diesel. 'In my view, natural gas should be brought under GST as soon as possible. Petrol and diesel can follow later,' he said. This comes amid a long-running debate in India over whether to include transport fuels in the unified tax regime, a move that could alter both pricing and revenue-sharing between the Centre and states.

India's Refining Strength as a Buffer

This is not the first time India's refining infrastructure has served as a buffer against global energy shocks. The country has significantly expanded its refining capacity over the past decade, and its diversified crude sourcing — including increased volumes from Russia following the 2022 sanctions-driven discount — has given oil companies greater flexibility in managing input costs. De underscored that this structural resilience, combined with adequate global crude availability, positions India to maintain supply stability even in a volatile international environment. How long companies can sustain the remaining 75% under-recovery without further retail price adjustments will be the critical test in the months ahead.