Indian fuel marketers bleed ₹530 crore daily as crude prices soar
Oil-marketing companies are losing about ₹530 crore each day on petrol, diesel and LPG sales because crude prices have jumped while domestic fuel prices stay flat, according to rating agency Icra.
Rating agency Icra reports that Indian oil-marketing companies are incurring daily losses of around ₹530 crore on the sale of petrol, diesel and LPG cylinders as crude oil prices have surged sharply. Underrecoveries are estimated at ₹8 per litre for petrol and ₹9 per litre for diesel, while each LPG cylinder is under-recovered by roughly ₹300. The price spike stems from heightened geopolitical friction in West Asia, including a renewed US-Iran conflict, the shutdown of Saudi Arabia’s East-West pipeline and intensified Houthi activity in the Red Sea, pushing the Indian crude basket to $117.4 per barrel.
Icra warns that the mismatch between high crude costs and unchanged retail prices will strain OMCs’ earnings, cash flows and short-term borrowings in FY27, though their refining margins stay healthy above $10 per barrel in Singapore. Cumulative LPG underrecoveries have risen to about ₹61,940 crore as of June 30, reflecting the gap between international price hikes and domestic pricing or government compensation.
Why it matters
The widening gap between crude costs and retail fuel prices threatens the financial health of India's major fuel distributors.
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