Diesel is Rs 40 a litre cheaper at the pump than in bulk. That is why pumps are capping it.

By Strota Newsroom · 2026-09-30 · How Strota reports

In the last week of September, India's privately owned fuel retailers began limiting how much diesel a single customer can take from one outlet. Reliance BP Mobility, the joint venture between Reliance Industries and BP, has capped diesel at 50 litres per customer at several Jio-bp pumps, and some stations have added a daily ceiling of around 6,000 litres. Nayara Energy, which is backed by Rosneft, has capped diesel at 200 litres and petrol at 30 litres at its stations.

The reason is not that India has run short of diesel. It is a price gap. Retail diesel at the pump has not changed since 25 May. Bulk diesel, the fuel that factories and fleets buy through their own storage and supply arrangements, moves with international crude, and crude has climbed through the year. The difference between the two prices is now as much as Rs 40 a litre.

That turns a routine purchase into an arbitrage. A factory running a diesel generator, a hotel running a backup set, a logistics firm filling trucks: each of them saves up to Rs 40 for every litre if it fills at a retail pump instead of buying in bulk. Sujata Sharma, a joint secretary in the Petroleum Ministry, put the difference at Rs 40-42 a litre and said demand at some pumps had risen 20 to 30 per cent.

What that looks like at the nozzle is size. Some industrial buyers are filling 400 to 600 litres at a time, far more than a car or a small truck takes. Buyers have been seen filling drums. A pump generally holds two to three days of stock, so when demand at one station jumps by a fifth, the fuel meant for motorists is drawn down faster than it can be replaced.

The privately owned pumps moved first because they wear the loss first. State-owned Indian Oil, Bharat Petroleum and Hindustan Petroleum kept retail prices low to shelter households, and between them they sell about 90 per cent of India's retail fuel. Private retailers price closer to the market, so they are quicker to protect their own stations. Reliance BP set limits of the same kind in April, in the first weeks of the war, when crude flows through the Strait of Hormuz almost stopped.

The loss numbers are public, and they explain the behaviour. ICRA estimates that the three state refiners are losing Rs 530 crore a day on fuel marketing, with a marketing margin of negative Rs 8 a litre on petrol and negative Rs 9 a litre on diesel. Domestic cooking gas under-recoveries are around Rs 300 per cylinder in September. Private retailers were losing about Rs 5 a litre on petrol and Rs 23 a litre on diesel as of 9 September, and those figures have widened since.

Crude is the other half of the same equation. ICRA put India's crude basket at USD 117.4 a barrel on 21 September, against an average of around USD 66 a barrel in 2025-26. The Economic Times reported that Saudi Aramco halted crude supplies to Indian refiners until further notice after attacks on its East-West pipeline, which pushed refiners to look for alternative barrels, often at a higher price.

The mechanism is worth stating plainly, because it decides who gets the fuel. A retail pump sells to anyone who drives up, at a posted price set by the oil company. A bulk buyer does the opposite: it buys through a dedicated consumer pump or a direct supply contract, at a price that tracks the market. When the market price runs well ahead of the posted retail price, the posted price becomes the bargain, and the cheap place to fill is the pump.

The government already saw this coming. On 11 June the Petroleum Ministry issued an order barring industrial, commercial and institutional buyers from filling at retail pumps, capping diesel at 200 litres per customer or vehicle a day and banning resale. That order was written to last up to 90 days. At the time, retail diesel in Delhi was about Rs 95.20 a litre, while bulk diesel was about Rs 134.50.

There is a counter-current worth keeping in view. Mint reported that oil prices settled 2.5 per cent lower on signs that Middle East exports were recovering, and that OPEC delegates signalled they would stick with steady quotas. If bulk prices come back toward retail, the gap that created the rush narrows by itself, without anyone capping anything.

Who pays in the meantime is the household. A driver who pulls into a station that has been drained waits longer, or finds the fill itself is limited. Shailendra Gupta, co-founder of Delhi-based Vishwaa Logistics, said his trucks run in Gujarat and Haryana and that Nayara and Reliance pumps in both states had cut diesel to 50 to 100 litres per vehicle over the last few days. Diesel is about 40 per cent of India's fuel demand, so what happens at the diesel pump reaches freight, and freight reaches the price of what is carried.

What is not established is a national shortage. The companies say their networks remain supplied: Nayara said it continues to serve its dealer network, and Reliance BP said its measures were meant to keep fuel available for mobility and transport rather than for industrial use. Whether the limits spread depends on whether the state-owned majors join, which the wire reports describe as possible but which they had not yet done.

The record shows a gap of as much as Rs 40 a litre, a cap of 50 litres at some pumps, and queues forming where the two meet. It does not show that India is running out of diesel, and it does not show that the pump price is about to move. Both of those are settled elsewhere: by the state refiners and the government on the retail price, and by crude on the bulk side. Until one of them moves, the gap stands, and the pump keeps a lid on how much anyone can take.

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