India Stabilizes Fuel Prices Amid Global Energy Shock

The Government of India implemented aggressive fiscal measures to insulate citizens from a global energy shock triggered by a US-Israel war on Iran and the blockade of the Strait of Hormuz. Between March and May 2026, Brent crude prices surged from $70 to a peak of $126 per barrel. In response, the government slashed petrol excise duties from Rs 13 to Rs 3 per litre and eliminated diesel excise levies entirely to keep retail prices flat, while imposing export duties on diesel and aviation turbine fuel to prioritize domestic supply.

These interventions sparked public anxiety and viral social media rumors regarding a potential national lockdown to curb fuel consumption. Finance Minister Nirmala Sitharaman and Petroleum Minister Hardeep Singh Puri repeatedly dismissed these claims as completely false, clarifying that Prime Minister Narendra Modi's parliamentary references to COVID-19 were examples of resilience, not proposals for new restrictions. Simultaneously, the government increased social media censorship, removing dozens of posts and satirical content critical of its cautious foreign policy toward the conflict.

While the state maintained stability, the strategy placed a heavy financial burden on public sector oil marketing companies, which incurred losses exceeding Rs 1 lakh crore over ten weeks by absorbing the price hikes. Opposition leader Jairam Ramesh criticized the government's failure to achieve energy independence, alleging that crude import dependence rose to 90% by 2025. Despite these pressures, officials maintain that domestic inventories remain adequate, though economists warn that prolonged disruptions could eventually lead to severe physical shortages.