India Limits Fuel Sales to Prevent Shortages Amid Price Shocks

Key facts

• India has limited gasoline and diesel sales at retail fuel stations.
• Commercial consumers are prohibited from purchasing fuel at retail stations.
• Diesel sales are capped at 200 liters per vehicle or customer.
• The new fuel sale limits are set to be in effect for 90 days.
• The measures aim to prevent supply crunches exacerbated by rising oil import costs and inflation.

India has implemented limits on gasoline and diesel sales at retail fuel stations to prevent supply shortages, according to reports. Commercial consumers are now banned from purchasing fuel at these stations and must source it from bulk sellers. Daily limits have been placed on diesel sales, capped at 200 liters per vehicle or customer, with resale prohibited.

The measures are set to remain in effect for an initial period of 90 days. This action follows a significant increase in India's oil import bill and soaring wholesale inflation, which reached 8.3% in April, up from 3.88% in March. The surge is attributed to disruptions in crude oil flows through the Strait of Hormuz since the conflict in the Middle East began, impacting over 40% of India's imports.

Wholesale fuel prices saw substantial increases in April, with gasoline prices rising by 32.4% and diesel by 25.19%. This energy price shock led India to end a four-year freeze on fuel prices, implementing four hikes within a single month. The government aims to shield consumers from these price shocks while managing supply.