Summary of this article
Government cut excise duty on petrol to Rs 3 per litre and scrapped altogether for diesel
Export duties imposed on diesel at Rs 21.5/litre and ATF at Rs 29.5/litre; petrol exports remain exempt
Duty cuts expected to ease pressure on OMCs, delay retail price hike
Fuel prices steady across major cities since Iran war began
Excise Duty on Petrol and Diesel: The government has reduced the special additional excise duty on petrol to Rs 3 per litre, down from Rs 13 earlier, effectively reducing the tax burden on the fuel. In the case of diesel, it has removed this duty altogether. Previously, the duty on diesel stood at Rs 10 per litre.
The decision comes as the West Asia conflict has choked crude oil supplies and drove up global oil prices by as much as 40 per cent.
Finance Minister Nirmala Sitharaman said the government’s priority is to ensure there is no shortage of petrol, diesel and aviation turbine fuel, and that retail prices do not rise because of global disruptions.
"Today, we have announced a decision, whereby we will be giving support to oil marketing companies (OMCs) so that they can import the material, and the common people do not have to face any hike in the price of petrol and diesel. We are ensuring that there is no price hike in petrol or diesel. Even for aviation turbine fuel (ATF), we are making sure that the prices do not go up," the Finance Minister told ANI.
Govt Imposes Export Duties On Diesel, ATF
Further, the government has imposed export duties of Rs 21.5 per litre on diesel and Rs 29.5 per litre on ATF. Earlier, there was no export duty on diesel or ATF. Petrol exports continue to remain exempt from this tax.
These measures are intended to prevent private refiners from prioritising high foreign profits over domestic availability during a volatile market period.
Crude Oil Prices Surge 40% Since Iran War Began
Since the US and Israel launched strikes on Iran on February 28 after talks about Tehran's nuclear program failed to yield a deal, crude oil prices have surged over 40 per cent.
Around 1:00 PM on March 27, the Brent crude oil futures traded at $102.51 per barrel, up by 0.61 per cent, while the West Texas Intermediate (WTI) crude oil futures was trading higher by 0.41 per cent at $94.87 a barrel.
Before the Iran war, on February27, Brent crude quoted at $72.48, while the WTI crude stood at $67.02.
Relief For OMCs
At current international prices, OMCs are estimated to be losing about Rs 24 per litre on petrol and around Rs 30 per litre on diesel, according to the Union Minister for Petroleum and Natural Gas Hardeep Singh Puri.
He said in a post on X, "Government has taken a huge hit on it taxation revenues to ensure very high losses of oil companies (approximately 24 Rs/litre for petrol and 30 Rs/litre for diesel) at this time of sky high international prices are reduced."
India’s crude oil basket, which reflects the average price paid by domestic refiners, stood at $147.24 per barrel on March 24, 2026, according to Petroleum Planning & Analysis Cell (PPAC).
Before the conflict intensified, the Indian basket averaged $69.01 per barrel in February. This was roughly the price at which OMCs were sourcing crude from global markets before the disruption.
So far in March, the average price has climbed to $123.15 per barrel, indicating a steep rise in the cost of imports. This means refiners are now paying significantly more to procure crude, putting pressure on fuel retailers.
The Indian basket is a weighted average of different types of crude oil that Indian refineries typically process. It includes a larger share of sour crude, mainly from Oman and Dubai, and a smaller portion of sweet crude, represented by Brent.
What It Means For You
As retail prices of petrol and diesel have not been raised in line with global rates, OMCs have been absorbing the impact. The government has cut these duties to ease this burden on OMCs and to ensure adequate fuel remains available in the domestic market.
The duty cuts are expected to delay any immediate increase in petrol and diesel prices, offering the government some room to hold rates steady for the time being.
Petrol And Diesel Prices Today
As of March 27, 2026, petrol and diesel prices in Delhi, Mumbai, Chennai and Kolkata remained unchanged from the previous day, and have held steady since the Iran war started on February 28.
In Delhi, petrol is priced at Rs 94.72 per litre and diesel at Rs 87.62 per litre. In Mumbai, petrol costs Rs 103.49 per litre and diesel Rs 89.97 per litre. Kolkata has petrol at Rs 104.99 per litre and diesel at Rs 91.76 per litre, while in Chennai, petrol is priced at Rs 100.79 per litre and diesel at Rs 92.38 per litre.
