Seeking to cushion oil-marketing companies (OMCs) from the fiscal impact of skyrocketing benchmark oil prices amidst the escalating war in West Asia, the government, in an order dated March 26 (Thursday), reduced the Special Additional Excise Duty on petrol and diesel by ₹10 per litre each. This, in effect, has brought down the duty on petrol to ₹3 and on diesel to nil.

This, however, will not immediately translate into lower prices for consumers as it is instead aimed at providing a little more fiscal breathing room. That is, these companies will continue selling fuel at existing prices, but will now have to pay less tax to the government.

Underlining the rationale of the move, Union Petroleum Minister Hardeep Singh Puri wrote on his social media that the government has taken a huge hit on taxation revenues through this reduction.

“Government has taken a huge hit on its taxation revenues to ensure very high losses of oil companies (approximately ₹24/litre for petrol and ₹30/litre for diesel) at this time of sky-high international prices, are reduced,” he stated. “At the same time, export tax has been levied as international prices of petrol and diesel have skyrocketed, and any refinery exporting to foreign nations will have to pay export tax.”

In a separate post, Finance Minister Nirmala Sitharaman wrote that duties on the export of diesel have been set at ₹21.5 per litre, and on aviation turbine fuel at ₹29.5 per litre.

Escalating tensions in West Asia and their impact on seaborne energy trade have had an impact across the globe. This has also resulted in energy prices spiralling upwards. At the time of writing (10:10 a.m. IST), brent crude futures (for May 2026) were trading more than 5% higher at $107.34 for every barrel and have been consistently above the $100/barrel mark since the war in Iran broke out.

While public sector OMCs are currently holding fuel prices level, some private ones are beginning to pass on their higher input costs to consumers.

On Thursday (March 26, 2026), privately-owned refiner Nayara Energy increased the prices of petrol by ₹3 per litre, and by ₹5 per litre of diesel. In a statement, they cited “unprecedented challenges in the industry, impacting several aspects of fuel disruption and availability”.

Rumours of a lockdown are false: Hardeep Puri

Further addressing ongoing speculations about a potential lockdown amidst the fuel crisis, Mr. Puri stated the rumours are “completely false”.

“Let me state this clearly, there is no such proposal under consideration by the Govt of India,” he wrote.