India Hikes Fuel Prices After 4 Years as 7-Day Oil Reserve Exposes Import Risk
Updated
Updated · The Hindu · May 18
India Hikes Fuel Prices After 4 Years as 7-Day Oil Reserve Exposes Import Risk
6 articles · Updated · The Hindu · May 18
A four-year freeze ended last week when the Centre raised retail petroleum prices, after warning that high crude costs had left state-run oil marketers absorbing heavy under-recoveries.
India’s strategic petroleum reserve holds only about 36.7 million-39 million barrels—roughly 7 days of demand at 5.5 million barrels a day—highlighting why a weaker rupee and higher import bills are biting harder.
Even including oil marketing company inventories and import cover, total stocks amount to just over 70 days, while the U.S. and China maintain far larger reserve systems and broader buffers against supply shocks.
The vulnerability is sharper in gas: LPG storage is about 1.4 lakh tonnes against daily consumption of 80,000 tonnes, and India lacks underground LNG storage for a fuel critical to fertilizer production.
The price hike, coming after state election results and amid April inflation pressures, underscores a longer-term policy gap as major economies use deeper oil and gas reserves to cushion consumers from global spikes.
India's rupee hits a record low. Can its new economic plan avert a deeper crisis amid soaring energy prices?
Caught between cheap Russian oil and US trade deals, what is the ultimate price of India's energy security strategy?
With oil reserves for just 7 days, how is India's energy crisis becoming a threat to the global economy?
Bracing for Rs 20/Litre Fuel Hikes: India’s Energy Vulnerability and the Road to Resilience in 2026
Overview
In May 2026, India faced a sharp rise in fuel prices, driven by global uncertainty and high crude oil costs. Dealers and analysts expected further staggered increases in petrol and diesel prices. In response, the government launched austerity measures to manage demand and conserve resources. Prime Minister Modi urged citizens to cut fuel use, rely more on public transport, and delay non-essential spending like gold purchases and overseas holidays to help protect foreign exchange reserves. The government also promoted buying locally made goods over imports, aiming to strengthen the economy and reduce vulnerability to global market shocks.