How government determines petrol diesel prices?:Price is only ₹53/litre; rest are taxes, dealers’ commission others – here’s a complete breakdown

The big tax relief given by the Government of India in the form of a sharp reduction in excise duty on petrol and diesel has given hope to the citizens that fuel prices will not increase in the country for the time being. But those who wish that the oil companies may now pass on the benefit of the reduction of tax relief to the end consumer, much to their disappointment, the government-owned fuel retailers may not reduce the mobility fuel prices. All India Petroleum Dealers Association (AIPDA), president, Ajay Bansal, said to the news agency, ANI, that the public may not see an immediate price reduction and that the excise duty cut will only help prevent price hikes. How are fuel prices determined? In India, the price of petrol and diesel at the pump is based on a few things: These factors together determine how much you pay at the petrol pump. History of petrol diesel prices since Covid-19: Since the Covid-19 period, petrol and diesel prices in India have seen a lot of ups and downs. Oil Marketing Companies (OMCs) like Indian Oil, Bharat Petroleum, and Hindustan Petroleum are the ones who decide fuel prices on daily basis. They have changed the prices many times during this period, depending on what’s happening in the global oil market. OMCs mounting losses Right now, OMCs are losing money on every litre of petrol and diesel they sell. This is because they are selling fuel at a lower price than what it costs them to buy. According to Petroleum Minister Hardeep Singh Puri, the fuel retailers currently absorb a loss of ₹24 per litre for petrol and ₹30 per litre for diesel on sale of mobility fuel. While, Ajay Bansal, All India Petroleum Dealers Association (AIPDA), president, said on Friday to the news agency, ANI, that, the government-owned OMCs had to absorb ₹45 to ₹50 per litre on sale of the mobility fuel. What if Govert didn’t cut taxes? The government reduced the excise duty (tax) on petrol and diesel. If they hadn’t done that, OMCs would have had to increase the price of petrol and diesel. It could have been a big jump in price per litre. Eg, Bansal says that considering the current international crude oil prices, the OMCs would have had to hike diesel prices by ₹81.90 per litre and that of petrol by ₹26 per litre. When petrol diesel prices were last slashed in India? The OMCs had last slashed fuel rates by ₹2 per litre in March 2024. Since then, petrol in the national capital costs ₹94.72 per litre and diesel comes at ₹87.62 per litre. At the time, Brent crude was available at $75 per barrel. Price of Brent Crude on Friday Owing to the West Asia conflict, Brent crude prices have skyrocketed over 58% from $70 per barrel on 27 February 2026 to $111 per barrel.