Indian drivers face higher fuel costs after state-run fuel retailers raised petrol and diesel prices for the first time in four years by three rupees ($0.03) per litre, equivalent to more than 3%.
The increase comes as the retailers try to recoup losses incurred due to higher global crude oil prices.
India, the world's third-biggest oil importer and consumer, is one of the last major economies to raise retail fuel prices, since the start of the U.S.-Israeli war with Iran.
Global oil prices have risen sharply since the beginning of the conflict at the end February.
The spike has been driven by the effective closure of the Strait of Hormuz, a sea passage through which around 20% of the world’s petroleum and crude oil normally passes.
India’s state-run Indian Oil Corp, Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL), which together control more than 90% of the country’s 103,000 petrol stations, tend to set diesel and petrol prices in tandem.
A Bharat Petroleum Corporation Limited (BPCL) spokesperson confirmed the price increase at its retail outlets. Indian Oil. Hindustan Petroleum Corporation Limited (HPCL) didn't immediately respond to a request for comment.
Following the rise, diesel in Delhi will cost 90.67 rupees ($0.95) a litre and petrol 97.77 rupees ($1.02), reflecting increases of 3.4% and 3.2%, respectively, from 87.67 rupees ($0.91) and 94.77 rupees ($0.99) a litre.
Shares of Indian fuel retailers were down between 2.4% and 3.6% on Friday (15 May). Indian Oil Corp fell 2.4%, HPCL dropped 3.3% and BPCL was down 3.6% as of 05:50 GMT.
Madhavi Arora, Chief Economist at Mumbai-based Global Financial Services said higher fuel prices would increase Indian consumer price inflation by around 0.15%, but said the indirect impact would be greater.
"The hikes are not enough but could be the start of multiple staggered hikes," she said.
To curb fuel consumption and rein in oil import bills, New Delhi has rolled out austerity measures as policymakers brace for a prolonged energy shock.
On Sunday (10 May), Prime Minister Narendra Modi urged a spate of measures including fuel conservation, work-from-home practices, and limits on travel and imports, as surging global energy prices put pressure on the country's foreign exchange reserves.
Some states have issued notices to government departments this week to restrict travel, avoid physical events and shift meetings online, while also asking them to work from home two days a week, with offices half-staffed.
India is likely to widen the measures to cover millions of employees across the federal government, state-run banks and public sector firms, signalling a system-wide tightening of expenditure and operations as financial risks mount.
The government did not respond to a Reuters email seeking comment.
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