Oil Companies Hit Hard by Rising Crude Prices, Losses Reach Rs18 on Petrol and Rs35 on Diesel

Petrol and diesel prices in India may look stable at the pump, but behind the scenes, oil companies are absorbing heavy losses. Despite rising global costs, state-run firms have kept fuel rates unchanged for a long stretch, putting pressure on their finances.

Stable Prices Since 2022

Major public sector companies like Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum have not revised petrol and diesel prices since April 2022. This comes even as global crude oil markets have seen sharp ups and downs.

Prices surged past $100 per barrel after the Russia-Ukraine War, later cooled to around $70, and have recently climbed again to nearly $120 per barrel. Yet, retail fuel prices in India have remained steady throughout.

Losses Mounting Rapidly

Holding prices steady has come at a cost. Reports suggest oil companies are currently losing about ₹18 per litre on petrol and up to ₹35 per litre on diesel. At one point, daily losses touched nearly ₹2,400 crore. Even after some government relief, losses are still estimated at around ₹1,600 crore per day, far from sustainable.

Excise Duty Cut Offered Limited Relief

In March, the government reduced excise duty on petrol and diesel by ₹10 per litre. However, this benefit was not passed on to consumers. Instead, it helped oil companies recover a portion of their losses. While it offered some breathing room, it hasn’t fully solved the problem.

Heavy Dependence on Imports

India imports nearly 88% of its crude oil requirements, making it highly sensitive to global price movements. The country sources oil from regions like the Middle East, Russia, and the United States. When international prices rise, India’s import bill increases sharply, adding further strain on both the economy and oil companies.

What Lies Ahead

With global crude prices remaining volatile, the pressure on oil companies is unlikely to ease soon. Unless there’s a shift in pricing strategy or further government intervention, the gap between retail prices and actual costs may continue to widen.