RBI Governor Sanjay Malhotra said that if the Middle East conflict continues, India may be forced to raise petrol and diesel prices due to the soaring cost of crude oil in the global market.
The RBI Governor highlighted that rising energy prices due to the Iran war are testing India’s flexible inflation targeting, necessitating potential policy intervention by the Reserve Bank. The central bank’s next monetary policy meeting is slated for June 5, when it will take a call on key interest rates, which it has left untouched to promote economic growth.
The Governor indicated that raising retail fuel prices is “a matter of time” if the West Asia crisis persists, which in turn would lead to an increase in transportation costs and inflation.
In its April 2026 meeting, the RBI’s Monetary Policy Committee unanimously decided to keep the repo rate unchanged at 5.25 per cent, maintaining a neutral stance. This decision reflects a “wait and watch” strategy to balance strong domestic growth while keeping an eye on inflation amid global uncertainties
“We are being more and more data dependent. The RBI is being flexible in its approach and is ready to look through the shock if it is transitory, but if it is entrenched, we need to take action,” Malhotra said at a conference hosted by the Swiss National Bank and the International Monetary Fund in Switzerland on Tuesday
He pointed out that excise duties had been reduced while the public sector oil companies were absorbing the rise in global crude prices amid the continuing Middle East conflict.
Meanwhile, Petroleum Minister Hardeep Singh Puri has stated that petrol, diesel and LPG stocks in the country are adequate, but hinted that prices may have to be raised due to the heavy losses that public sector oil companies were piling up.
Puri said state-run oil marketing companies are incurring losses of nearly Rs 1,000 crore per day because fuel prices have not been increased despite the sharp rise in the cost of crude oil in the international market, which has crossed the $100 per barrel.
India imports as much as 88 per cent of its crude oil requirement, and any increase in global prices leads to a sharp rise in the cost of production of petrol, diesel and LPG.
According to the minister, under-recoveries have reached Rs 1.98 lakh crore while losses for the June current quarter stand at nearly Rs 1 lakh crore.
Puri said the oil companies have increased LPG production to 55,000-56,000 tonnes from around 35,000 tonnes earlier to ensure an uninterrupted supply. The minister also said India currently holds crude stocks equivalent to around 76 days of demand.
