Consumers across Kerala are now paying significantly more for fuel, as state-owned oil marketing companies implemented a ₹3 per litre hike on both petrol and diesel, effective May 15, 2026. This revision marks the first increase since March 21, 2025, following a prolonged period where prices were held steady ahead of state assembly elections.
New Fuel Rates in Kerala Cities
The updated prices mean that in major cities such as Thiruvananthapuram, Kochi, and Waynad, petrol is now priced at ₹110.58 per litre, while diesel costs ₹99.35 per litre. Final retail prices continue to vary slightly across different cities due to local taxes and transportation costs.
Reasons Behind the Price Hike
The timing of the fuel price adjustment is closely tied to the electoral calendar. Historically, fuel prices in India have often been kept stable during election periods to avoid potential voter dissatisfaction. With the 2026 state assembly elections now concluded, the accumulated pressures from global crude oil prices and a weakening Indian rupee have been passed on to consumers.
Global crude oil prices have remained elevated in recent months, exacerbated by disruptions to shipping routes in West Asia and ongoing geopolitical tensions around the Strait of Hormuz. India, which imports the majority of its crude oil, is highly susceptible to these international market fluctuations. The Ministry of Petroleum and Natural Gas previously reported significant under-recoveries for oil marketing companies (OMCs) – approximately ₹26 per litre on petrol and ₹81.90 per litre on diesel – due to the gap between international costs and domestic retail prices.
Impact of Rupee Depreciation
Adding to the pressure is the depreciation of the Indian rupee against the US dollar. A weaker rupee increases the cost of importing crude oil, directly impacting the procurement expenses for OMCs like Indian Oil, Bharat Petroleum, and Hindustan Petroleum. These combined factors have squeezed the margins of these companies, necessitating the current price revision.
How Fuel Prices are Determined in India
Retail fuel pricing in India is primarily influenced by the international price of crude oil, as the country imports most of its requirements. The rupee-dollar exchange rate is another critical factor. Additionally, central and state government taxes constitute a substantial portion of the final price, often accounting for more than half of what consumers pay at the pump. These taxes, along with transportation costs and local demand-supply dynamics, explain the price variations observed across different cities and states.