Fuel Prices Rise in India: Panic Buying Amid Selective Hike

Fuel prices have triggered fresh concerns across India following a price increase announced by one major private oil marketing company. While global oil prices continue to climb due to the ongoing conflict in West Asia, the situation on the ground in India remains nuanced. Not all fuel outlets are affected, and the government has maintained that there is no nationwide shortage or uniform price hike.

The spike originated with Nayara Energy, a private company with significant Russian investment, which raised petrol prices by up to Rs 5.3 per litre and diesel by Rs 3 per litre at its approximately 7,000 petrol pumps nationwide. This move has created visible panic among consumers, leading to long queues and even temporary dry-outs at some stations, particularly in cities like Hyderabad where nearly 40% of pumps reportedly ran out of fuel temporarily due to panic buying. However, this is not a countrywide phenomenon. Public sector oil marketing companies — Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) — have not increased prices and continue to sell fuel at previous rates.

In Delhi, for instance, petrol is still hovering around Rs 94 per litre and diesel at about Rs 87 per litre, stable compared to recent weeks. Government officials have repeatedly assured citizens that India holds sufficient buffer stocks, with strategic petroleum reserves and combined reserves of oil marketing companies covering over 80 days of consumption. Iran has also assured safe passage for Indian ships through the Strait of Hormuz, providing some relief to supply chains.

Experts point out that Nayara, being a private player, does not have the same access to government strategic reserves or subsidies as the public sector giants. It procures fuel from the open market and is directly passing on the impact of rising global crude prices — which have surged from around $75 per barrel at the start of the conflict to nearly $120. Russia, despite discounted supplies to India, has also raised prices, adding to the cost pressure for private operators.

Despite official assurances of ample supplies, panic buying has created an artificial shortage in several areas. Consumers, recalling recent LPG supply issues, rushed to fill up tanks fearing a broader crisis. Retailers reported a sudden doubling of daily customers at some outlets, overwhelming limited storage capacity and logistics.

An economist provided a data-backed view, highlighting India's comfortable position. She noted that government strategic reserves alone cover about 9.6 days, while total reserves with oil marketing companies extend coverage to around 74 days. She argued that the government has been actively shielding consumers by using past surpluses and dividends from public oil companies. Private players like Nayara, lacking these buffers, have no choice but to pass on costs.

An office bearer of the Delhi Petrol Dealers Association, clarified that Nayara is the largest private oil marketing company but not the biggest overall. Public sector companies operate far more outlets: Indian Oil alone has around 50,000, while BPCL and HPCL together exceed 50,000.  He echoed the no-panic message, stressing that crude imports are diversified, unlike LPG which depends on fewer sources. He advised consumers to avoid Nayara pumps if they want cheaper fuel and urged calm, pointing out that dry-outs were purely demand-driven rather than supply failures.

A consumer policy expert took a sharper view focused on consumer rights and accountability. He criticized the lack of clear, neutral communication to help people make informed choices. Many consumers rely on convenient neighbourhood pumps without knowing which company operates them. Mishra argued that mobility is essential for livelihood, and sudden unavailability at regular outlets naturally causes panic. He called for better public transport activation during such periods and greater transparency in supply chains.

He expressed frustration over the absence of government officials in public debates and highlighted what he sees as a lack of accountability when pumps run dry despite official claims of plenty. He questioned why inefficiencies in logistics or distribution are not investigated publicly and why consumers — who ultimately fund the system — feel taken for granted.

The discussion also touched on possible policy responses. Other options on the table include increasing fuel subsidies, providing direct benefit transfers to low-income households, or offering temporary working capital support to retailers. Retailers highlighted a practical issue: the shift to “cash and carry” from earlier credit facilities has strained their working capital, especially when panic doubles daily sales. They called for restoration of credit lines or government-backed support to ease logistics during weekends and holidays.

For now, the government maintains it is managing the situation well by passing on benefits from taxes and past gains to consumers. Most fuel stations, especially those run by public sector companies, continue at old rates. Consumers are advised to check pump branding, avoid unnecessary panic buying, and opt for government outlets where possible to access stable pricing.