No Lockdown, But Rising Fuel Prices? How the Iran-Israel War Could Affect Petrol, Diesel and Your Pocket
The rumours about a lockdown that have been spreading across the country are completely false. Petroleum Minister Hardeep Singh Puri has clearly stated that the Government of India is not considering any such proposal, calling these claims irresponsible and harmful . This speculation appears to have been fuelled by long queues at petrol pumps and concerns over LPG supplies following the closure of the Strait of Hormuz, a crucial route for global oil shipments, amid the ongoing conflict in West Asia . The government has reassured citizens that it is closely monitoring the situation and that all necessary steps are being taken to ensure fuel, energy, and other critical supplies remain available without interruption .
The real concern for the common person is not a lockdown but the soaring global crude prices. Over the past month, international crude oil prices have surged dramatically, jumping from around $70 per barrel to nearly $122 per barrel due to the geopolitical tensions in the Middle East following the joint Israel-US operation in Iran . This spike has triggered sharp increases in fuel costs worldwide, with prices rising between 20% and 50% across regions like Southeast Asia, North America, Europe, and Africa .
In response to this global volatility, the Indian government has taken a significant step to protect its citizens. On Friday, the central government announced a major reduction in excise duties, cutting the tax on petrol to ₹3 per litre from ₹13 and reducing the duty on diesel to zero from ₹10 per litre . Finance Minister Nirmala Sitharaman explained that this decision was made to shield consumers from a rise in prices, with Prime Minister Modi ensuring that citizens are protected from the vagaries of supply and costs of essential goods . Minister Puri elaborated that the government had two stark choices: either pass on the full burden of rising international prices to consumers, as many other countries have done, or absorb the financial impact itself. The Modi administration opted for the latter, taking a substantial hit on its taxation revenues to keep households and businesses from steep fuel price hikes . In fact, oil companies were facing losses of approximately ₹24 per litre on petrol and ₹30 per litre on diesel due to the soaring global rates, losses that the government is now helping to absorb .
The situation remains tense, and the timeline for recovery is directly linked to the duration of the conflict. A formal ceasefire is seen as unlikely, but there is hope for an informal understanding on the Strait of Hormuz that could allow most shipping to resume . If hostilities end quickly, analysts predict that energy flows could recover, and the risk premium on oil prices could ease by mid-year. In this best-case scenario, we could see crude prices fall to $75-80 per barrel by June and further down to $65-70 per barrel by the end of December . However, if the war drags on for several months, the outlook darkens significantly. In a prolonged 2-6 month conflict, with the Strait of Hormuz effectively closed, oil prices could skyrocket to between $120 and $180 per barrel in the short term, with prices remaining elevated around $80-110 by the end of the year . Bernstein analysts have warned that the era of cheap $60-70 oil is likely over for this year, with supply disruptions and damaged infrastructure keeping prices high .
For a common worker, the fear is that fuel prices could reach a point where they become unaffordable. Minister Puri has explicitly stated that the government is bearing the brunt of the high global costs so that citizens are insulated from this international volatility . The excise duty cuts mean that petrol and diesel prices have not been increased in India, even as they have soared elsewhere . While this provides a critical buffer, the situation remains precarious. If the conflict escalates or becomes prolonged, the government's ability to absorb losses could be stretched, potentially leading to price hikes in the future. For now, the assurance from the government is clear: there will be no lockdown, and they are committed to ensuring that the common man does not bear the burden of this global crisis
⚠️ Disclaimer: This post is for informational purposes only. The situation may change based on global developments. Please rely on official government sources for confirmed updates. We are not responsible for any financial or personal decisions made based on this information.
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