3 hrs ago
Rising Crude Prices Deepen Losses for India’s Oil Marketers
Oil has become much more expensive because tensions between the United States and Iran have increased.
India buys most of its crude oil from other countries.
However, petrol and diesel prices in India have not risen enough to match the higher crude costs.
This means oil marketing companies are losing money when they sell fuel.
They are losing about Rs 5 on each litre of petrol and Rs 23 on each litre of diesel.
Companies are also facing higher costs for imported crude, shipping and insurance.
India’s oil import bill has risen sharply even though the amount of oil imported has changed very little.
Refiners are therefore trying to buy oil from more countries, including Russia, Brazil and African suppliers.
Brent crude crossed $100 per barrel as US-Iran tensions intensified.
Indian oil marketing companies are losing about Rs 5 per litre on petrol and Rs 23 on diesel.
Domestic petrol, diesel and LPG prices remain restricted despite higher international crude costs.
India’s crude oil import bill rose 56.5% to $63.4 billion during April-July FY27.
Indian refiners are diversifying supplies amid worsening West Asia tensions and procurement disruptions.
- Who
- India’s oil marketing companies, refiners and fuel consumers are affected; analysts from Icra and Equirus Securities assessed the impact.
- What
- OMCs are reporting negative marketing margins as Brent crude rises above $100 per barrel while domestic fuel prices remain restricted.
- Where
- The impact is centered in India and is linked to supply and geopolitical tensions in West Asia.
- When
- The developments were reported after Brent crossed $100 per barrel on Wednesday; import data covers April-July of FY27.
- Why
- Escalating US-Iran tensions have pushed international crude prices higher, while domestic petrol, diesel and LPG prices have not increased proportionately.
Key facts
- Petrol marketing margin
- Negative Rs 5 per litre at the average September price, according to Icra.
- Diesel marketing margin
- Negative Rs 23 per litre at the average September price, according to Icra.
- Domestic LPG under-recovery
- Approximately Rs 200 per cylinder.
- Brent crude
- Crossed $100 per barrel, compared with approximately $70-$75 per barrel before the conflict began.
- Crude import bill
- Rose 56.5% to $63.4 billion during April-July FY27.
- Import volume
- Reached 81.9 million tonnes during April-July FY27, compared with 81.5 million tonnes a year earlier.
- India’s import dependence
- India imports almost 90% of its crude oil and 50% of its natural gas requirements.
Quotes
Prashant Vasisht
Senior vice president and co-group head of corporate ratings at Icra
“If crude remains above $100 per barrel, with restricted retail-price increases, OMCs could face negative petrol and diesel marketing margins, higher LPG under-recoveries, higher crude-landing, freight and insurance costs, working capital and debt accumulation and inventory losses if crude subsequently corrects sharply”
rediff.com
“With the escalation in hostilities between Iran and the US, Brent prices have crossed the $100 per barrel mark today and the Indian crude basket is at approximately $109 per barrel”
rediff.com
Sources
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