The Centre on Wednesday said the pressure being witnessed at retail fuel outlets is not due to any shortage of petrol or diesel, but because industrial and bulk consumers are shifting purchases to retail pumps to take advantage of lower subsidised prices.
In a detailed statement on Wednesday, the government asserted that India has “more than adequate” fuel supplies to meet both retail and industrial demand, and urged citizens not to panic or believe rumours around shortages.
“The picture that emerges from the field is consistent. There is no scarcity of any petroleum product. There is, in pockets, a pattern of arbitrage that is creating the appearance of one,” the government said.
According to the Ministry of Petroleum and Natural Gas, PSU oil marketing companies (OMCs) have been absorbing losses of nearly Rs 550 crore per day on the sale of petrol, diesel and domestic LPG as part of a broader consumer protection strategy amid ongoing geopolitical disruptions in West Asia. Retail fuel prices have therefore not fully reflected the rise in international crude prices.
The government said this pricing cushion is intended for households, farmers and ordinary consumers, and not for industrial procurement, where fuel prices continue to track international benchmarks.
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The government in a press release said industrial buyers are increasingly diverting purchases from bulk channels to retail pumps in order to benefit from lower retail prices. This, in turn, is leading to concentrated demand at PSU retail outlets and creating localised supply stress.
The ministry noted that private oil marketing companies have seen around a 38% decline in high-speed diesel (HSD) offtake this month across both retail and bulk customers due to higher pricing, with volumes shifting to PSU retail outlets. PSU bulk customer volumes have also declined nearly 29%, indicating migration toward retail pumps.
To curb malpractice, the Centre has asked States and Union Territories to form special enforcement squads and initiate strict action against black marketing, unauthorised stocking, hoarding and diversion of petroleum products under provisions of the Essential Commodities Act and related control orders.
Union Petroleum Minister Hardeep Singh Puri has been holding regular consultations with PSU OMCs, state governments and industry bodies to ensure uninterrupted fuel availability. The Petroleum Secretary also reviewed the situation with Chief Secretaries of States and UTs, along with industry bodies including FICCI and CII.
India currently has an installed refining capacity of 258.1 million tonnes per annum across 22 operational refineries, making it the world's fourth-largest refiner. Domestic petroleum consumption stood at 243.2 million tonnes in fiscal year 2026, while exports of refined petroleum products were 61.5 million tonnes during the year.
“The Government remains fully seized of the international situation,” the statement said, adding that India's refining capacity, PSU OMC operations and coordination between the Centre, states and industry continue to provide a strong energy security framework during the current period of global uncertainty.
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