India's Third Fuel Price Increase This Month, Iran War Pushes Up Oil Costs

Reuters reported on May 23 that India's state-owned fuel retailers raised the retail prices of gasoline and diesel again on Saturday. The price of gasoline in New Delhi increased by 0.87 rupees per liter to 99.51 rupees, and diesel increased by 0.91 rupees per liter to 92.49 rupees, with each increase being less than 1 rupee.

This marks the third price increase by Indian state-owned retailers this month. The Indian government has long controlled the retail prices of fuels, and state-owned retailers often bear losses when crude oil costs are high. After the outbreak of war in Iran, international crude oil prices have continued to rise, and the cumulative pressure has forced the government to allow multiple small price adjustments at the retail level to partially pass on the costs.

It is noteworthy that each increase has been deliberately controlled below 1 rupee, showing that the government is still seeking a balance between inflationary pressures and retailer losses. India is the world's third-largest oil importer, and the situation in the Middle East has a very direct impact on its energy costs.

For the market, the continuous increase in Indian fuel prices is one of the specific manifestations of the impact of the Iran war on the global energy supply chain, and it will also put upward pressure on India's domestic inflation figures. The policy direction of the Reserve Bank of India in the future deserves attention.