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Quick Snapshot
Before the US-Israel strikes on Iran, Brent crude traded near $67-73 per barrel. That was as recently as early March 2026. Today, on June 2, Brent sits at around $94-96 per barrel. That is an increase of roughly 30-40% in under three months.
India, which imports close to half its crude through the Strait of Hormuz, felt this immediately. Oil Marketing Companies (OMCs) had been absorbing losses quietly for weeks. Then, after five state assembly elections concluded, the dam broke. Fuel prices were hiked four times in the span of eleven days. The last hike, on May 25, added Rs 2.61 per litre to petrol and Rs 2.71 per litre to diesel in one shot.
As of June 2, 2026, petrol in Delhi costs Rs 102.12 per litre. In Mumbai, it is Rs 111.21. Diesel in Delhi is Rs 95.20. The rupee, meanwhile, trades at around Rs 95 per US dollar, having weakened about 11% over the past year. That depreciation directly raises India’s crude import bill in rupee terms, independent of the price of oil itself.
What Happened in the Middle East
The US-Israel military campaign against Iran began in late February 2026. Iran, in response, threatened to restrict the Strait of Hormuz, the narrow waterway through which nearly half of India’s crude oil imports pass. Tehran has also raised the possibility of closing the Bab el-Mandeb Strait, a key alternative route for tankers rerouting around the Gulf.
As of June 1, Iranian media reported that Tehran suspended communications with Washington in response to Israeli strikes in Lebanon. The Brent August futures contract surged more than 5% on that single day. Trump said talks would ‘work out well,’ but also said he ‘did not care’ whether the negotiations were over. That kind of mixed signalling keeps markets volatile.
Oil prices remain roughly 30% above where they were before the conflict began, despite partial easing from earlier peaks. Markets are not pricing in resolution, they are pricing in prolonged uncertainty.
Petrol and Diesel Prices Across Major Cities (June 2, 2026)
| City | Petrol (Rs/Litre) | Diesel (Rs/Litre) |
| New Delhi | 102.12 | 95.20 |
| Mumbai | 111.21 | 97.83 |
| Bengaluru | 110.89 | 98.8 |
| Hyderabad | 115.73 | 103.82 |
| Chennai | 107.87 | 99.65 |
| Kolkata | 113.51 | 99.82 |
| Ahmedabad | 101.83 | 97.92 |
Note: Prices are shaped by a combination of central excise duty, state VAT, dealer margins, and logistics costs. The central government’s excise duty is uniform. State-level taxes vary, which is why Mumbai and Hyderabad are consistently higher than Delhi.
Also worth noting: the Modi government revised export duties for the fortnight starting June 1. Petrol export duty is now Rs 1.5 per litre, diesel Rs 13.5 per litre, and aviation turbine fuel (ATF) Rs 9.5 per litre. These are not retail price changes but signal the government is managing OMC economics carefully.
The Rupee Problem Makes It Worse
India buys crude in US dollars. When the rupee weakens against the dollar, the rupee cost of every barrel rises, even if the dollar price of crude stays the same.
On June 2, the USD/INR rate stands at approximately Rs 95.16. The rupee peaked at Rs 96.97 in mid-May. Over the past 12 months, the rupee has weakened by about 11%. A year ago, a barrel of Brent at $70 would cost roughly Rs 5,810. Today, at $95 and with a rate of Rs 95, that same barrel costs Rs 9,025. That is a 55% jump in rupee terms, even though the dollar price of crude has gone up by only around 36%.
The RBI has been intervening to limit volatility. The rupee has actually strengthened slightly from its May highs, supported by RBI action and easing oil price expectations as ceasefire rumours circulate. But the structural pressure remains.
The Russian Oil Waiver: What Is Actually Happening
This is a part of the story that is more complicated than most coverage suggests.
India had been reducing Russian oil imports through early 2026, under US pressure. Then the Iran war disrupted Gulf supply. The US, facing global energy market chaos, issued General License 134 on March 5, 2026, allowing India (and others) to purchase Russian crude already loaded on ships at sea. This was a short-term measure to prevent supply gaps.
The license was extended twice: first to May 16 via General License 134B, and then again on May 18 via General License 134C, valid until June 17, 2026. This covers only Russian oil that was already at sea before April 17. It excludes transactions involving Iran, North Korea, Cuba, or Russia-controlled Ukrainian territory.
India’s position is clear. Joint Secretary Sujata Sharma from the Ministry of Petroleum stated publicly: ‘We have been purchasing from Russia earlier, before the waiver, also during the waiver, and now also’. India will continue buying Russian oil regardless of whether a further extension comes after June 17. The waiver helps smooth logistics, but India is not dependent on it for its procurement decisions.
As of May 2026, Russian oil accounts for roughly 35-40% of India’s total crude imports, up significantly from around 1% before the Ukraine war.
Why This Is Not Just About Pump Prices
Diesel does not just run cars. It runs freight trucks, tractors, fishing boats, generators at construction sites and cold storage units, and railway engines. A diesel price increase is effectively a cost increase across the entire supply chain of the Indian economy.
Higher diesel costs push up freight rates. Higher freight rates push up the cost of vegetables, grains, milk, and manufactured goods at the retail level. This shows up as food inflation, which hits household budgets harder than the pump price itself.
CNG prices in Mumbai were also hiked by Rs 2 to Rs 86 per kg. PNG (piped natural gas for homes) rose by Rs 0.50 to Rs 52 per standard cubic metre. The energy price pressures are not limited to liquid fuels.
What to Watch in the Coming Weeks
| Signal | What It Means for India |
| Brent crude falling below $85 | Relief likely; further hikes unlikely in near term |
| Strait of Hormuz reopening | Supply normalises; rupee may strengthen further |
| USD/INR crossing Rs 97 again | Import costs rise; OMC pressure returns |
| General License 134C expiry on June 17 | Waiver may lapse; Russia oil logistics face uncertainty |
| RBI policy decision (upcoming) | Rate hold expected at 5.25%; signals on inflation critical |
| US-Iran ceasefire extension (60-day reported) | Could bring Brent toward $80-85 range |
My Take
What we are watching right now is a situation where India’s domestic fuel prices are being shaped almost entirely by events it has no control over. A military conflict between the US, Israel, and Iran. A diplomatic standoff at the Strait of Hormuz. A rupee that has weakened 11% over twelve months. A Russian oil waiver that expires on June 17 with uncertain renewal.
The one pattern worth noting is the political timing of the price hikes. Four hikes in eleven days, immediately after five state elections concluded. That is not coincidence. The government clearly held back. Now the OMCs are catching up. If the next round of elections is some months away, consumers should not expect relief to come quickly from the political side either.
The partial good news is that Brent has come down from its May peak of nearly $120. Peace talks between the US and Iran appear to be moving, however slowly. If a 60-day ceasefire extension takes hold, as some reports suggest, crude could fall toward $80-85. At that level, the rupee stabilises, OMC losses reduce, and the pressure for further hikes eases. But that is still a conditional scenario, not a certainty.
