Kamal Ghorui
The Middle East crisis continues to choke energy supplies across the world and push crude prices higher, swinging around $100 per barrel mark. However, even though input costs for energy continue to rise, fuel prices remain unchanged in India, pushing state-run oil marketing companies under mounting losses.Losses are estimated at around Rs 18 per litre on petrol and Rs 35 per litre on diesel. Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) have not revised retail prices since April 2022, even though global crude rates have fluctuated sharply during this period.Crude prices have been volatile recently, moving from above $100 per barrel to about $70 earlier this year, before soaring to $120 again last month after the Middle East war began.
How much are oil giants losing?
At their peak, the three firms were losing about Rs 2,400 crore per day but came down to around Rs 1,600 crore daily. The reduction came after the government cut excise duty on petrol and diesel by Rs 10 per litre each, which was used to offset losses and was not passed on to consumers, sources told PTI.Losses in March have wiped out gains made in January and February, and the companies are likely to report losses for the January–March quarter.A Macquarie Group report said, “At spot petrol-diesel pricing of $135-165 per barrel, we estimate India’s oil marketing companies lose Rs 18 and Rs 35 per litre on petrol and diesel sales (respectively).” It added that every $10 per barrel rise in crude increases losses by about Rs 6 per litre.The report also flagged a possible fuel price hike after elections in West Bengal and Tamil Nadu later this month, stating, “We see risk of higher pump prices post state elections in April.”India imported about 88% of its crude oil needs in 2025, making it vulnerable to global price changes. Imports came mainly from the Middle East, Russia and the United States, though the country continued to export refined products like petrol, diesel and aviation fuel.Even after the recent duty cut, central taxes stand at Rs 11.9 per litre on petrol and Rs 7.8 per litre on diesel. The report said removing these completely would still not fully cover company losses. State VAT rates have mostly stayed unchanged.It also warned that further tax cuts could hurt government finances. A full rollback of excise duties could lead to a revenue loss of about $36 billion and widen the fiscal deficit.Fuel taxes now make up about 8% of government revenue, down from 22% earlier, and contribute less to the fiscal deficit than before.Higher crude prices could also widen India’s current account deficit, which is expected to reach around $20 billion in the first quarter of 2026. A $10 rise in crude could increase the deficit further, the report said.With uncertainty around earnings, every $1 change in crude prices impacts company earnings by about 5%. The sector’s break-even crude price is estimated at $80–85 per barrel. Macquarie said it prefers utilities over oil companies for now.
