Petrol Price Hike Likely as Oil PSUs Bleed ₹ One Lakh Crore Amid Global Energy Shock

India’s state-run oil marketing companies — Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited — have incurred estimated losses of nearly ₹ 1 lakh crore since mid-March, as they continued supplying fuel without raising retail prices despite a sharp global energy shock.

The losses stem from under-recoveries, the gap between rising input costs and unchanged retail prices, following a steep surge in crude oil prices triggered by escalating tensions in West Asia.

Uninterrupted Supply Despite Crisis

Despite severe supply-side disruptions, the three oil PSUs ensured uninterrupted availability of:

• Petrol
• Diesel
• LPG
• Aviation Turbine Fuel (ATF)

This came even as panic buying surged after disruptions in the Strait of Hormuz — a crucial artery for India’s energy imports.

Their logistics and supply chains were stretched, but no shortages or rationing were reported across the country.

Crude Price Shock: From $72 to $144

Global crude benchmark Brent Crude saw extreme volatility:

• Around $72 per barrel before February 28
• Spiked to nearly $144 per barrel at peak escalation

The surge followed military tensions involving United States, Israel and Iran, along with disruptions in oil tanker movement.

Government Cushion Limits Losses

Without government intervention, OMC losses could have touched ₹62,500 crore.

Key measures included:

• Excise duty cut by ₹10/litre on petrol and diesel
• Petrol excise reduced to ₹3/litre (from ₹13)
• Diesel excise reduced to zero (from ₹10)

At peak crude levels, the Centre absorbed:

• ~₹24/litre on petrol
• ~₹30/litre on diesel

Daily Losses Mounting

During April:

• Under-recovery:
  • ~₹18/litre on petrol
  • ~₹25/litre on diesel
• Daily losses: ₹600–700 crore

Additional cost pressures included:

• Emergency crude sourcing
• Higher freight due to rerouting
• Elevated marine insurance
• Refinery optimisation costs

India vs Global Trend

While India kept retail prices unchanged since February 28:

• Spain: +34%
• Japan, Italy, Israel: +30%
• Germany: +27%
• United Kingdom: +22%

Unlike many countries, India saw:

• No fuel rationing
• No mobility restrictions
• No supply disruptions

What Lies Ahead

Sources indicate that if crude prices remain elevated:

• Fuel price hike may become unavoidable
• Working capital borrowings could rise
• Capex plans may be recalibrated

However, investments in:

• Refining expansion
• Energy security
• Ethanol blending & biofuels
• Transition fuels

are expected to continue with government backing.

Current Retail Prices (Unchanged)

• Petrol: ₹94.77/litre
• Diesel: ₹87.67/litre