On Sunday, Prime Minister Modi urged the country to reduce fuel usage by opting for public transport and working from home whenever possible. The Iran war has sent crude oil prices soaring from around $60 a barrel at the start of 2026 to over $100 today. Despite almost daily gyrations, as hopes for a peace agreement contend with fears of escalation, that represents a price hike of more than 50% in a very short period of time. For India, which imports nearly 90% of its oil needs and whose strategic petroleum reserves are slender relative to other major economies, this is a stress test of the first order.
GoI’s chief response has been to deploy fiscal resources to shield consumers from the worst of the price surge. The playbook is familiar: excise duty cuts, compression of oil marketing company margins, and subsidies embedded in the pricing framework. Domestic petrol and diesel prices have remained broadly unchanged since January. In April, retail petrol prices in India, which had been higher than in the US at the start of the year, slipped below them, a striking illustration of how far domestic prices have drifted from underlying costs.
