Both companies sharply raised pump prices in the weeks after the Iran war started, pushing consumers toward state-run fuel retailers which had chosen to absorb losses by keeping retail prices unchanged despite a sharp rise in crude oil and fuel prices.
Petrol and diesel sales at Nayara, India’s largest private fuel retailer, plunged 30% and 46%, respectively, in April. In comparison, sales at state-run retailers rose nearly 9% for both fuels, according to industry data. Nayara’s market share slipped to 4% in petrol and 3% in diesel in April, from around 6% last year.
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Shell’s diesel sales collapsed 77%, reducing its market share to 0.07% from 0.3%. Its petrol sales, however, rose 4%, although its share edged down slightly to 0.5%.
RIL-BP, however, bucked the trend among private fuel retailers, posting robust sales growth. Its petrol sales rose 23% and diesel sales increased 4.5%. Higher sales boosted its petrol market share to 4% from 3.5%, while diesel share remained steady at around 5.3%.
While private retailers account for a relatively small share of fuel sales nationally, their presence is significant in certain regional markets. As a result, when demand in a local market shifts away from a particular retailer’s pumps due to higher prices or fuel rationing, neighbouring outlets come under intense pressure. Since these stations cannot immediately meet the additional demand with regular supplies, consumers tend to panic, leading to longer queues and local shortages.
Executives at state-run oil companies said the sudden migration of customers from private pumps, coupled with industrial consumers moving away from more expensive bulk diesel purchases, contributed to fuel shortages at some outlets.
Nayara and Shell raised prices significantly after the start of the Iran war, which served as a strong deterrent to consumers. Over the past week, state-run oil firms also raised petrol and diesel prices by nearly Rs 4 per litre. Nayara and Shell’s retail prices remain substantially higher than those of state-run firms.
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Another pressure point for diesel demand has been elevated bulk prices. Bulk diesel currently costs about ₹45 per litre more than retail. State-run oil companies raised bulk diesel prices soon after the Iran war broke out. Bulk diesel, which accounted for around 12% of total diesel sales in the country before the war, has since seen sales slump by 30-40%.