Tuesday Sep 29, 2026
Tuesday Sep 29, 2026
Monday, 28 September 2026 05:01 - - {{hitsCtrl.values.hits}}
A proposal for a fuel subsidy of Rs. 41 billion covering the next three months will be presented to Cabinet today (28), with a decision expected, as world oil prices climb again following a renewed escalation of the US/Israel-Iran war.
The Government said Rs. 41 billion had been allocated for fuel subsidies for the next three months so that the burden of high world market prices would not be passed fully on to the public.
The new allocation is smaller than the previous scheme. After the prices of all petroleum products rose rapidly in March, the Government said it spent Rs. 57 billion subsidising diesel by Rs. 100 a litre and petrol by Rs. 20 a litre in April, May, and June. The Rs. 41 billion works out to about Rs. 13.7 billion a month, compared with about Rs. 19 billion a month under the earlier subsidy.
According to the Government, the world market price of diesel, which rose 115% in March compared with February, eased to 39% above February levels by the end of June. That relief was passed on to consumers in July, when the diesel price was cut by Rs. 25 a litre without a Government subsidy. World petrol prices, which rose 71% in March, fell back to 43.2% above February levels by the end of June, and the relief was likewise passed on. Domestic petrol prices were cut again as world prices fell further in July and August.
However, the Government said world prices of petrol, diesel, and crude oil had risen rapidly since August as the war in the Middle East escalated seriously. Diesel is now 92% higher than in February, petrol 78%, and Murban crude 66%, while domestic petrol and diesel prices are only 36.2% and 35.9% higher, respectively, it said.
Price data reviewed by the Daily FT show the same trend. The average Singapore price of 92-Octane Petrol for September to date is $ 134.50 a barrel, 21.3% higher than August, 78.7% above February’s pre-war average of $ 75.28, and the highest monthly average this year. Singapore prices are ‘free on board’ (FOB), meaning they reflect the cost of fuel loaded onto a tanker, before freight, and are a regional benchmark for fuel import costs. A barrel is about 159 litres.
Diesel benchmarks show a similar gap. Gas oil with 500 parts per million (ppm) sulphur averaged $ 170.99 a barrel in September, up 10.9% from August and 92.5% above February. Higher-grade 10 ppm gas oil averaged $ 178.48, 98, 5% above February. Jet fuel was up 90.2% at $ 169.32.
Local pump prices have risen far less. Following the last revision on 31 August, Lanka Petrol 92 Octane sells at Rs. 399 a litre, 36.2% above the pre-war price of Rs. 293. Lanka Petrol 95 Octane is Rs. 475, up 39.7% from Rs. 340. Lanka Auto Diesel is Rs. 382, up 35.9% from Rs. 281. Lanka Super Diesel is Rs. 478, 45.3% higher than Rs. 329.
The 31 August revision cut Petrol 92 to Rs. 399 from Rs. 414, and Petrol 95 to Rs. 475 from Rs. 495, while diesel prices were unchanged. Since then, Singapore petrol benchmarks have risen by more than a fifth.
Pump prices were raised in several steps after the war began, with increases of 7% to 8% on 10 March, a second round on 22 March, and further hikes on 3 May and 31 May. The 31 May revision took Petrol 92 to its peak of Rs. 434 a litre, 48.1% above pre-war levels, and Auto Diesel to Rs. 407, up 44.8%. The 30 June revision cut Auto Diesel by Rs. 25 to Rs. 382 and Petrol 92 by Rs. 20 to Rs. 414.
Benchmark prices peaked earlier. Singapore gas oil and jet fuel more than doubled in March and April, with 500 ppm gas oil averaging $ 191.73 a barrel in March, 115.8% above February. They fell back to about 40% above pre-war levels in June, before rising again from July.
