NEW DELHI: India's state-run Oil Marketing Companies (OMCs) are facing massive financial strain, having absorbed an estimated ₹30,000 crore in losses since mid-March in a bid to keep domestic fuel prices stable amidst an unprecedented global energy crisis.
The financial crisis stems from the escalating conflict in the Middle East. Following military strikes involving the US, Israel, and Iran in late February, shipping routes through the critical Strait of Hormuz were severely disrupted. This geopolitical turmoil caused global Brent crude oil prices to surge dramatically from around $70 per barrel to briefly touching the $140 mark, before stabilizing around $120-$126.
Despite the input cost soaring by over 50%, major retailers like Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL) have maintained uninterrupted supplies of petrol, diesel, and LPG without raising retail prices. According to industry sources, during the peak of the crisis in April, OMCs were losing between ₹600 to ₹700 crore daily—amounting to an under-recovery of roughly ₹18 per litre on petrol and ₹25 per litre on diesel.
Sources indicate that the losses would have catastrophic, swelling to nearly ₹62,500 crore, had the central government not intervened by heavily slashing excise duties on petrol and diesel. While countries like Spain, Japan, and the UK saw fuel prices spike by up to 34% along with rationing measures, India managed to avoid supply shortages and immediate inflation.
However, the prolonged pressure on the balance sheets of oil companies is nearing a tipping point. Sources suggest that with crude prices remaining elevated, the government is currently evaluating its options. A revision in retail rates is highly anticipated before mid-May, which could see petrol and diesel prices rise by ₹4 to ₹5 per litre, and domestic LPG cylinder prices by ₹40 to ₹50, marking the first major fuel price hike in years.