A hike of around Rs 5 – 6 per litre post the state elections in case the West Asia conflict prolongs till then is already factored in, they said.
On the other hand, a steep hike of say Rs 10 – 12 per litre and beyond, analysts believe, could dent sentiment in the medium term.
On its part, the government has denied reports of hiking petrol and diesel prices despite the surge in crude oil.
ALSO READ: OMCs losing ₹18/litre on petrol, ₹35 on diesel amid price freeze: Macquarie
The markets, according to G Chokkalingam, founder and head of research at Equinomics Research, have adequately priced in the possibility of a minor hike, if at all it happens. The government, he suggests, has enough cushion against the rising oil prices. The hike, if any, he believes, is likely to be staggered.
“The stocks may not fall badly as a hike to some extent is priced in. The markets will be comfortable even if the government hikes the petrol and diesel prices by 3 per cent – 5 per cent. That said, the hike will be staggered and a 10 per cent jump in auto fuel prices in one go is completely ruled out,” Chokkalingam said.
The contra view
ALSO READ: Indian Oil hikes premium petrol, diesel prices amid West Asia tensions
“The issue is no longer if, but when and by how much, with political considerations outweighing economics. Based on Indian basket of $120/bbl and low fixed margins ($8/15 per bbl for petrol/diesel), there is a case to raise prices by Rs 25-28/liter. However, political considerations will likely prevail and actual hikes may be more modest,” wrote Anil Sharma and Keshav Soni of Kotak Institutional Equities in a recent note.
“As a result, stock rebuilding, logistics repricing, and repair costs are expected to keep oil prices structurally supported, with near-term equilibrium above around $80/bbl,” wrote Maulik Patel and Khushboo Balani of Equirus Securities in a recent note.
Marketing margins
Petrol and diesel marketing margins, according to analysts’ estimates, deteriorated sharply in March 2026, with petrol averaging around Rs -20/litre (vs. +Rs. 12/litre in February) and diesel losses deepening to nearly Rs. -50/lit (versus +8/lit), significantly pressuring OMCs profitability alongside LPG under-recoveries.
While the government partially offset losses through excise duty cuts, current margins remain negative at around Rs. -6 to Rs. -8/lit for petrol and close to Rs. -20/lit for diesel. Additionally, higher export duties on diesel and aviation turbine fuel (ATF) were imposed to prioritize domestic supply, keeping overall margins under strain for standalone refiners too.
“OMCs may see a significant decrease in their margins if oil prices stay elevated like this. That said, the government will also assess how much they can absorb, to what extent can the OMCs take a hit and what to pass on to the consumers post the state elections,” said Bino Pathiparampil, head of research at Elara Capital.
