Why the pump price did not move

Between February and April 2026, Indian Basket crude climbed sharply as the Strait of Hormuz threat cut tanker flows. Yet Indian petrol and diesel prices barely changed. Why?

Three mechanics explain the gap.

One: retail price is sticky by design. Oil marketing companies (IOC, BPCL, HPCL) set the daily pump price. During crude shocks they choose to absorb the difference for political and fiscal-year reasons, rather than pass it through. The absorbed difference is called under-recovery. PPAC publishes quarterly numbers for it.

Two: the Union Government has room to move excise. Central excise is a flat per-litre amount, not a percentage. When crude rises, the Union can quietly cut excise to keep the pump price stable. The 2022 Russia/Ukraine cycle played out this way twice, in May 2022 and in successive Budget-day tweaks. Hormuz 2026 is tracking the same script.

Three: state VAT auto-dampens. Most state VAT formulas are percentage-based. When the underlying base shifts, state VAT moves with it proportionally, and the state absorbs (or gains) accordingly. This means state revenue and state politics quietly re-balance without the pump price tag visibly changing.

The data on this site lets you watch these mechanics play out. Pick any Hormuz-era date in the history chart and compare it against the next excise notification: the excise bar in the waterfall typically moves to cancel out the crude shift.

What it costs: the shortfall lands on OMC balance sheets and is eventually recapitalised through dividends or quieter fiscal transfers. The public sees stable petrol prices; the same public pays for them through other channels.