RBI Governor Sanjay Malhotra says petrol and diesel prices may rise if Middle East crisis continues & more related News Here

Reserve Bank Governor Sanjay Malhotra has said that the government may eventually have to increase petrol and diesel prices if the Middle East crisis continues for a long time, PTI reported on Wednesday.Speaking at a conference in Switzerland on Tuesday, Malhotra said disruption in oil and gas supplies due to the conflict and blockade in the Strait of Hormuz has started affecting India, which is largely dependent on energy and fertilizer imports.Referring to the crisis, the RBI governor said that if it continues for a long time, it would be “a matter of time before the government actually takes on some of these price increases”.Despite the conflict that started in West Asia on February 28, the government has not yet increased the prices of retail petrol and diesel.Malhotra also said the government remains fiscally prudent and is moving on the path of fiscal consolidation.The comments come amid growing pressure on India’s external sector due to higher crude oil prices and a weak rupee, which has slipped below 95 against the US dollar.Prime Minister Narendra Modi had earlier called for measures such as reducing fuel consumption and reducing the use of edible oil to help conserve foreign exchange reserves.As global crude oil prices surge amid the prolonged Middle East conflict and disruptions around the Strait of Hormuz, India has so far avoided major hikes in petrol and diesel prices, instead opting to absorb the pressure through state-run oil marketing companies (OMCs), tax adjustments and supply management measures.The Center has repeatedly said that despite the disruption in global energy shipments linked to the Iran conflict and the Strait of Hormuz crisis, there is no fuel shortage in the country and there are no plans to start rationing petrol, diesel or LPG.“There is no need to panic. There is enough supply. There is no rationing. This is not going to happen,” Oil Secretary Neeraj Mittal said at the recent CII annual business summit.Officials said India currently maintains fuel reserves of about 60 days and LPG reserves of about 45 days despite ongoing volatility in global energy markets.

OMC losses increase due to increase in crude oil prices

The government’s decision to keep retail fuel prices stable despite rising international crude oil rates has increased pressure on state-owned oil companies.According to official discussions reviewed during the recent government briefing, OMCs are estimated to lose between Rs 1,000 crore and Rs 1,200 crore every day due to higher crude oil prices and unchanged pump rates.Under-recovery is estimated to reach around Rs 2 lakh crore during the first quarter of 2026.The current crisis deepened after shipping movement through the Strait of Hormuz during the Iran conflict – a major global oil transit route that handles about a fifth of global crude flows – came into severe disruption.Brent crude prices soared above $110 a barrel during the latest phase of the crisis, leading to a sharp increase in import costs for major oil consuming countries like India. India imports about 90 percent of its crude oil needs, making the economy highly sensitive to global energy price shocks.

Government’s focus is on supply stability, inflation control

The Center has attempted to simultaneously contain inflation shocks and avoid panic in domestic fuel markets.Officials said India has increased purchases from alternative suppliers and secured additional energy cargo to maintain uninterrupted supplies.“We have purchased from other sources. We have purchased from other countries. We have increased procurement from existing countries and this has given us an edge in terms of supply management in the short term,” Mittal said.The government has also absorbed a part of the global price shock through excise duty adjustments on petrol and diesel. Officials estimate the revenue impact of the fuel-related tax cut to be around Rs 1.6 lakh crore.Prime Minister Narendra Modi on Sunday (May 10) urged citizens to save fuel, reduce unnecessary imports and avoid wasteful consumption as rising oil prices put pressure on India’s import bill and foreign exchange reserves. The Prime Minister encouraged greater use of public transport, carpooling, electric vehicles and work-from-home arrangements wherever possible. The government has described these as precautionary measures rather than emergency restrictions.

pressure is likely to continue

Fuel prices in India are one of the most politically sensitive economic issues as increases in petrol and diesel rates directly affect transportation costs, food prices and household budgets.Although the Center has so far avoided major retail fuel price hikes, analysts say prolonged price pressure could put further pressure on OMCs’ finances if crude prices remain high for a long time.