Fuel prices surge in Nepal as Middle East conflict intensify; Petrol up by Rs 15 per litre

KATHMANDU: Rising geopolitical tensions in the Middle East have begun to impact Nepal’s energy market, prompting the Nepal Oil Corporation to sharply increase the price of petroleum products across the country.

The state-owned fuel supplier announced on Sunday that petrol prices have been increased by Rs15 per litre, while diesel prices have been raised by Rs10 per litre, following the latest price list received from the Indian Oil Corporation.

With the adjustment, petrol will now retail at Rs172 per litre, while diesel will cost Rs152 per litre in the Nepali market.

The price revision comes amid escalating instability in the Middle East, particularly tensions linked to the Iran conflict scenario, which has pushed up global crude oil prices and increased import costs for countries like Nepal that depend entirely on imported petroleum products.

Heavy Financial Losses for the Oil Corporation

According to the latest cost calculations received from Indian suppliers, the corporation is currently facing significant losses across major petroleum products. The updated import price structure indicates a loss of Rs31 per litre on petrol, Rs54 per litre on diesel, and Rs216 per LPG cylinder.

The corporation’s board of directors decided to partially adjust prices during a meeting held Sunday after losses continued to widen due to rising international oil prices.

Despite the price increase, officials said the corporation will still incur estimated losses of around Rs3.93 billion over the next 15 days.

The financial pressure comes shortly after reports indicated that geopolitical developments in the Middle East had already caused losses of nearly Rs4 billion within just two weeks due to soaring import costs.

Stabilization Fund Used to Cushion Consumers

The corporation said it deliberately avoided implementing the full price increase reflected in the Indian supply price in order to reduce the burden on consumers.

Officials noted that the Fuel Price Stabilization Fund maintained by the corporation will be used to cover part of the losses so that retail prices remain relatively manageable for the public.

In its official statement, the corporation described the latest adjustment as a “compulsion” driven by extraordinary international circumstances, emphasizing that it remains aware of the economic impact on consumers and businesses.

“Under these challenging circumstances, the corporation has been forced to increase the price of petroleum products at a higher rate than expected,” the statement said, adding that the organization is mindful of the impact on consumers and stakeholders.

Diesel Price Adjustment Kept Lower

The corporation also said that although diesel import costs have risen sharply, the increase in diesel prices has been kept relatively lower compared to petrol.

This decision was taken considering diesel’s extensive use in public transportation, cargo transport, and supply chains, which directly affect the price of essential commodities and logistics across the country.

By limiting the diesel price increase, the corporation aims to ensure smoother operation of public transport and essential goods distribution, while trying to avoid a sharp rise in inflation and market prices.

Energy analysts say continued instability in the Middle East could further pressure fuel-importing countries like Nepal, potentially forcing additional price adjustments in the coming weeks if global crude prices continue to climb.