Petrol prices on Monday were hiked by 15 paisa a litre and diesel rates were increased by 17 paisa as global oil prices hit $70 mark in the wake of escalating US-Iran tensions fanning fresh fears of conflict in the crude-rich Middle East.
The retail pump prices of petrol in Delhi rose to Rs 75.69 per litre - the highest since November 2018, while those of diesel climbed to Rs 68.68, according to a price notification of state-owned fuel retailers.
This is the fifth straight day of increase in retail pump prices.
Oil prices surged, gold hit a more than six-year high and equities tumbled Monday amid escalating US-Iran tensions after the US assassination of commander Qasem Soleimani.
US President Donald Trump on Sunday warned of a "major retaliation" against Tehran after it threatened revenge for the killing.
Brent futures rose as much as 3.1 per cent, or $2.14, to $70.74 per barrel while West Texas Intermediate advanced 1.7 per cent to $64.10 on the New York Mercantile Exchange.
Crude was at this high level on September 2019, when Saudi production facilities were attacked, knocking out about 5 per cent of global output.
The deepening crisis continued to spill over to other markets - stock indices from Japan to Hong Kong fell. In India, Sensex plummeted 787.98 points to end at 40,676.63 while Nifty tanked 233.60 points to close at 11,993.05. Also, gold surged to the highest in more than six years.
India is 84 per cent dependant on imports to meet its oil needs and any spike in global prices has a direct bearing on its economy. Not just imports but even domestic crude oil -- which forms the raw material for making petrol, diesel and other petroleum products -- is priced according to international benchmarks.
The Middle East accounts for more than two-thirds of the country's oil imports, with Iraq and Saudi Arabia being the top suppliers.
Even though the import basket has been sought to be diversified with oil being contracted from nations such as the US, pricing in all the regions is governed by international benchmarks and rates went up everywhere following Friday's strikes.
Officials said there is no immediate threat of any supply disruption to India and the only impact would be felt in prices.
Goldman Sachs said an actual disruption to global supplies is needed to keep prices are current levels.
For an economy that is struggling to recover from a six-year low growth rate of 4.5 per cent, a spike in oil prices poses a significant risk as it will not just stoke inflation but also lead to higher outgo on government subsidies on cooking fuel.
"Nowhere in the world has seen any supply being stopped because of US strikes. Oil continues to flow as normal," an official said.
Monday's price increase is the fourth straight day of retail prices going up. Since ?January 2, petrol price has increased by 53 paise per litre while diesel rates have gone up 72 paise.
Prices were unchanged over the new year. Rates of petrol have been on the upswing since December 26 and that of diesel since November 29, 2019. Diesel prices have increased by Rs 2.95 per litre over this period while petrol has become costlier by 1.06 paise.