A report from Kotak Institutional Equities, published on April 23, 2026, warns that petrol and diesel prices in India could face a steep correction of ₹25–₹28 per litre following the conclusion of the current assembly elections in West Bengal and Tamil Nadu.
The report highlights that Indian oil marketing companies (OMCs) are currently absorbing massive losses to keep retail prices stable during the high-stakes polling season, a situation that is becoming financially unsustainable.
1. The Math Behind the ₹28 Hike
Kotak estimates that the gap between global crude procurement costs and domestic selling prices has widened to an unprecedented level.
- Refiner Losses: State-run refiners are reportedly losing approximately ₹27,000 crore (₹270 billion) per month.
- Per-Litre Under-recovery: OMCs are currently losing nearly ₹18 on every litre of petrol and up to ₹35 on every litre of diesel.
- Global Benchmarks: With Brent crude trading near $104–$120 per barrel due to disruptions in the Strait of Hormuz, retail prices would need to rise by at least ₹25–₹28 to reach a “break-even” point for refiners.
2. Impact on Major Cities
If the full projected hike of ₹25–₹28 is implemented, fuel prices would hit record-breaking levels across India.
| City | Current Petrol (₹/L) | New Price (Est. +₹25) | New Price (Est. +₹28) |
| New Delhi | ₹94.77 | ₹119.77 | ₹122.77 |
| Mumbai | ₹103.50 | ₹128.50 | ₹131.50 |
| Bengaluru | ₹102.92 | ₹127.92 | ₹130.92 |
| Hyderabad | ₹107.46 | ₹132.46 | ₹135.46 |
3. Why Now? (The Election Factor)
The report notes that retail prices have remained static despite global volatility to avoid “voter backlash.”
- Election Timeline: Assembly elections in West Bengal and Tamil Nadu are currently underway.
- Counting Day: With results expected on May 4, 2026, economists predict the price revisions will likely begin shortly after the final votes are cast.
- Phased Rollout: To manage inflationary pressure, Kotak suggests the government may not implement the full hike at once, but rather through a series of gradual daily increases over several weeks.
4. Geopolitical Drivers
The surge in crude costs is driven by renewed tensions in West Asia:
- Strait of Hormuz: A critical passage for 40% of Indian crude imports remains partially shut or restricted following a lack of progress in peace talks between the U.S. and Iran.
- Supply Freeze: Despite a brief truce earlier in April, renewed incidents of ships being seized have kept physical oil markets extremely tight.
