As the conflict in West Asia intensifies between Iran and Israel, global energy markets are witnessing unprecedented volatility. With Brent crude prices surging past $100 per barrel due to disruptions in the critical Strait of Hormuz supply route, the Indian government has made a strategic intervention to shield domestic consumers from a massive fuel price hike. In a late-night move on Thursday, the Ministry of Finance announced a significant reduction in Central Excise Duty on both petrol and diesel.

According to the official gazette notification, the Special Additional Excise Duty on petrol has been slashed from ₹13 per litre to just ₹3 per litre. Even more strikingly, the duty on diesel has been reduced from ₹10 to ‘Zero’. This effective ₹10 cut per litre on both fuels is aimed at absorbing the shock of rising international crude prices, which recently spiked from $70 to nearly $122 per barrel. The move is expected to provide fiscal breathing room to State-run Oil Marketing Companies (OMCs) like IOCL, BPCL, and HPCL, which were facing losses of up to ₹30-₹48 per litre.

Petroleum Minister Hardeep Singh Puri stated that Prime Minister Narendra Modi chose to take a “hit on government finances” rather than passing the burden onto the citizens. While the revenue loss to the exchequer is estimated at a staggering ₹1.55 trillion annually, the priority remains stabilizing the economy and controlling inflation. Although retail pump prices might not drop instantly as OMCs look to recover previous losses, this tax cut ensures that the common man is insulated from the immediate “war premium” on fuel prices. The government has also hiked export duties on diesel and ATF to ensure adequate domestic availability during this global crisis.