Residents of the Andaman and Nicobar Islands are facing higher fuel costs following a significant price revision on May 15, 2026. Both petrol and diesel prices saw an increase of ₹3 per litre across the Union Territory, marking the first such hike since March 21, 2025.
Oil marketing companies implemented the changes, citing prolonged pressure from elevated global crude oil prices and a weakening Indian rupee against the US dollar. The timing of the revision comes shortly after the conclusion of state assembly elections, during which fuel prices were reportedly held steady by the government.
New Rates in Andaman & Nicobar
Following the latest revision, the new fuel prices in the Andaman and Nicobar Islands are:
- Petrol Rate: ₹84.99/litre
- Diesel Rate: ₹80.64/litre
Why the Hike Now?
The upward adjustment in fuel prices is primarily attributed to a confluence of international and domestic factors, with the electoral calendar playing a role in the timing of the announcement.
Global Crude Oil Prices
Global crude oil prices have remained high in recent months. Disruptions to shipping routes in West Asia and ongoing tensions around the Strait of Hormuz have contributed to this elevation. India, a major oil importer, sources a significant portion of its crude through the Hormuz route, although efforts are underway to diversify supply, with 70 percent of crude imports now routed outside this region. The Ministry of Petroleum and Natural Gas previously reported substantial 'under-recoveries' by oil marketing companies due to the gap between international crude prices and retail fuel costs.
Rupee-Dollar Exchange Rate
Another critical factor is the depreciation of the Indian rupee against the US dollar. Since crude oil is traded internationally in dollars, a weaker rupee increases the cost of imports for Indian oil marketing companies, directly impacting retail fuel prices.
Post-Election Adjustment
Historically, fuel price hikes in India have often been deferred during election periods to avoid potential voter backlash. With the state assembly elections now concluded, the accumulated cost pressures from elevated international crude prices and a weaker rupee are being passed on to consumers.
What Drives Fuel Prices in India?
Retail fuel prices in India are a complex calculation influenced by several key components:
- International Crude Oil Prices: This is the most significant determinant, as India imports the majority of its crude oil requirements.
- Rupee-Dollar Exchange Rate: Fluctuations directly affect the cost of crude imports.
- Central and State Taxes: These taxes constitute a substantial portion of the final retail price, often accounting for more than half.
- Transportation Costs: Charges for moving fuel from refineries to distribution points and then to petrol pumps also contribute to the final price.
- Dealer Commission: A margin paid to petrol pump owners.
The variation in petrol and diesel rates across different cities and states is largely due to differing state-level taxes and local transportation costs.