No Petrol, Diesel Shortage In India; Localised Shortages Due To Arbitrage: Govt

New Delhi, May 28 (KNN) The government has firmly ruled out any supply shortage of petrol or diesel, attributing localised fuel stress to deliberate arbitrage by industrial buyers exploiting subsidised retail prices.

India has "more than adequate supplies of petrol and diesel to meet every domestic need, retail and industrial alike," the Ministry of Petroleum and Natural Gas (MoPNG) said in a press release on Wednesday. 

The statement came amid reports of apparent tightness at fuel stations in parts of the country.

India, the world's fourth-largest refining hub, operates 22 refineries with a combined annual capacity of 258.1 million tonnes. Domestic consumption stood at 243.2 million tonnes in FY26, while the country exported 61.5 million tonnes of petroleum products — affirming that no supply constraint exists.

“Union Petroleum Minister Hardeep Singh Puri has been in continuous coordination with public sector oil marketing companies (OMCs), state governments, and industry bodies to ensure uninterrupted supply of Petrol & Diesel to all,” the release noted.

A review with chief secretaries of states and Union Territories, as well as industry bodies FICCI and CII, confirmed no scarcity on the ground.

The Real Problem: Arbitrage, Not Shortage

The government identified the root cause of localised supply stress as arbitrage — industrial consumers diverting their purchases from bulk procurement channels to retail fuel stations to exploit the price gap.

Under government direction, public sector OMCs are currently absorbing losses of approximately Rs 550 crore per day on petrol, diesel, and domestic LPG to shield retail consumers — households, commuters, and farmers — from the full impact of international price volatility linked to the ongoing West Asia conflict. This subsidy cushion, the government clarified, is not intended for industrial buyers, whose pricing is meant to track international rates.

"There is no scarcity of any petroleum product. There is, in pockets, a pattern of arbitrage that is creating the appearance of one," the ministry emphasised.

Shift in Market Volumes

The government noted a marked shift in fuel offtake patterns. Private OMCs have seen a decline of roughly 38 per cent in high-speed diesel sales this month, while bulk industrial offtake through PSU OMCs has fallen by around 29 per cent — with both volumes migrating to retail outlets, amplifying pressure at pumps.

Price Adjustments

Retail fuel prices have seen partial upward revisions, with petrol and diesel rising by approximately Rs 7.5 per litre and CNG by Rs 6 per litre, as a portion of higher international energy costs is passed on to consumers amid the West Asia conflict.

(KNN Bureau)