Fuel duty cuts offer breathing room amid global oil turmoil

March 27, 2026 Hot from the Oven Valli Sarvani

Rising global tensions often ripple into everyday economic concerns, especially fuel costs.

In a significant move, the Indian government has sharply reduced additional excise duties on petrol and diesel.

This decision comes as global oil markets face disruption due to conflict in West Asia.

The revised structure lowers excise duty on petrol from ₹13 per litre to ₹3.

Likewise, diesel duty has been cut from ₹10 per litre to zero. As a result, both fuels see a ₹10 per litre reduction in additional excise burden.

Although retail prices remain unchanged for now, the move is expected to ease pricing pressure going forward.

This policy shift follows a surge in crude oil prices triggered by geopolitical instability. Notably, tensions involving the US, Israel, and Iran have disrupted supply routes.

The Strait of Hormuz, a crucial global oil transit point, now faces blockades. Consequently, nearly 20-25 million barrels of oil shipments per day are affected. Earlier, India sourced about 12-15% of its crude through this route.

At the same time, oil marketing companies had been absorbing losses due to rising input costs.

Therefore, the duty reduction provides them with financial relief on the marketing side. This could potentially stabilise supply chains and pricing strategies.

In addition, the government has removed the Special Additional Excise Duty on Aviation Turbine Fuel (ATF).

This step supports the aviation sector, which has been struggling with high operational costs. However, a windfall tax of ₹29.5 per litre has been imposed on ATF exports.

Meanwhile, authorities have reassured citizens about fuel availability. The Ministry of Petroleum and Natural Gas emphasised that supply remains steady across the country.

All petrol pumps are functioning normally, and no shortages have been reported. Furthermore, refineries are operating at high capacity with sufficient crude reserves.

Despite isolated reports of panic buying, officials urge the public to remain calm. Adequate petrol and diesel stocks are available nationwide. Increased domestic LPG production further strengthens energy security.

The government’s intervention aims to cushion the impact of global uncertainty while maintaining domestic stability.

Image from Pxhere (Free for commercial use / CC0 Public Domain)

Image Published on February 13, 2017