State-run oil marketing companies are facing heavy losses as crude prices rise sharply while domestic petrol and diesel prices remain unchanged.
Highlights
- IOC, BPCL and HPCL are estimated to be losing around ₹530 crore per day on fuel marketing.
- Marketing margins are around negative ₹8/litre on petrol and negative ₹9/litre on diesel.
- Indian crude basket surged to $117.4/barrel on September 21, versus an average of about $66 in FY26.
- LPG under-recoveries are estimated at around ₹300 per cylinder in September.
New Delhi: India’s three state-run oil marketing companies—Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL)—are estimated to be losing around ₹530 crore every day on fuel marketing as a sharp rise in international crude oil prices puts pressure on their margins.
According to an Icra assessment reported in the newspaper, marketing margins of the three OMCs are currently estimated at around negative ₹8 per litre on petrol and negative ₹9 per litre on diesel. Domestic LPG is also adding to the strain, with under-recoveries estimated at around ₹300 per cylinder in September.
The pressure has intensified following a steep rise in crude oil prices. The Indian crude basket jumped to $117.4 per barrel on September 21, compared with an average of around $66 per barrel in 2025-26.
The report attributed the rise partly to renewed geopolitical tensions and disruptions affecting oil supplies in West Asia. With domestic retail fuel prices remaining unchanged, higher crude costs are putting pressure on profitability, cash flows and working-capital requirements of OMCs.
Icra estimates that if Brent crude averages $105–115 per barrel during the second half of FY27 and petrol and diesel retail prices remain unchanged, OMCs could face under-recoveries of around ₹64,000 crore in FY27.
The financial impact could become substantially larger if crude prices climb further. At Brent prices of $130–140 per barrel, Icra estimates under-recoveries could rise to around ₹1.91 lakh crore.
However, the refining side of the business remains relatively strong. Singapore gross refining margins have remained above $10 per barrel, providing some support to oil marketing companies even as their fuel-marketing operations face mounting pressure.
