Another Fuel Hike Risk Remains As Crude Stays Above $110; Can Russia Oil Help?

The United States has extended by another month its sanctions waiver allowing countries to continue importing Russian seaborne crude oil, a move that could provide short-term relief to global energy markets and potentially help India avoid another sharp increase in fuel prices.

The development comes as crude oil prices remain elevated amid geopolitical tensions in West Asia and continued disruptions around the Strait of Hormuz, one of the world's most critical energy shipping routes. Benchmark Brent crude has climbed to around $111 per barrel, intensifying pressure on fuel-importing countries such as India.

For India, the extension is huge because refiners continue to rely heavily on discounted Russian crude to manage costs and reduce pressure on domestic fuel prices. As continued access to Russian supplies could help soften global oil prices and ease some of the burden on consumers after recent fuel price hikes.

The waiver, initially introduced in March and extended once in April, allows vulnerable economies to continue accessing Russian cargoes despite broader sanctions. US Treasury Secretary Scott Bessent said the temporary 30-day licence would ensure oil supplies continue reaching countries most dependent on imported energy while helping stabilise physical crude markets.

According to Kpler data, India imported nearly 2 million barrels per day of Russian crude in March and around 1.6 million barrels daily in April, underlining the importance of Russian supplies in India's energy basket.

Indian officials have maintained that purchases from Russia are driven entirely by commercial considerations.

Fuel Prices Rise Again

The waiver extension assumes greater importance because Indian consumers have already witnessed two fuel price increases within a span of five days.

Petrol prices were raised by another ₹0.86 per litre while diesel prices increased by ₹0.83 per litre on Tuesday in the latest revision. Following the increase, petrol prices climbed to ₹98.64 per litre while diesel prices rose to ₹91.58.

The latest hike comes just days after state-owned oil companies increased petrol and diesel prices by nearly ₹3 per litre on May 15, ending a four-year freeze on fuel rate revisions.

The back-to-back increases have heightened concerns that sustained crude prices above $100 per barrel could force further increases in retail fuel rates.

OMCs Still Under Pressure

Despite recent fuel price hikes, state-run oil marketing companies continue to face significant financial strain. Industry estimates suggest oil retailers are still losing nearly ₹750 crore daily by selling petrol, diesel and domestic LPG below market-linked rates.

The recent increase is therefore viewed as only partial relief rather than a complete pass-through of global crude costs.

India, the world's third-largest importer and consumer of crude oil, remains highly vulnerable to international price movements because it imports more than 85% of its oil requirements.

Global crude prices had surged above $120 per barrel earlier amid concerns around the US-Iran conflict and disruptions across shipping routes before easing slightly. However, prices continue to remain elevated.

The Russian oil waiver may provide breathing space in the near term, but unless geopolitical tensions ease and supply chains normalise, pressure on fuel prices and inflation risks could persist.