Despite tensions in the Middle East and a rise in crude oil prices, petrol and diesel prices in the country have remained stable for a long time. However, oil companies are incurring huge losses due to this. According to sources, state-owned oil companies are incurring losses of around Rs 18 per litre on petrol and up to Rs 35 per litre on diesel. According to the news agency PTI, despite price deregulation, Indian Oil Corporation (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have not changed retail fuel prices since April 2022. During this period, global crude oil prices have fluctuated significantly.
Loss of about Rs 2,400 crore per day
Crude oil prices, which had risen above USD 100 per barrel following the Russia-Ukraine war, fell to around USD 70 earlier this year. However, recent geopolitical tensions and attacks in the Middle East have again pushed prices higher to around USD 120 per barrel. According to industry sources, when prices peaked last month, these companies were incurring losses of approximately Rs 2,400 crore per day. However, after the government cut excise duty by Rs 10 per litre, this loss has reduced to approximately Rs 1,600 crore per day. This relief was used to offset the companies’ losses rather than to be passed directly to consumers.
Companies are expected to incur losses in the January-March quarter
Experts say that the losses incurred in March have wiped out the profits of January-February, and companies are expected to incur losses in the January-March quarter. According to a report by global brokerage firm Macquarie Group, oil marketing companies are incurring losses on the sale of petrol and diesel at current international prices. The report also said that every USD 10 per barrel increase in crude oil prices increases the loss by about Rs 6 per litre. The report indicates that retail fuel prices may increase after the elections in states such as West Bengal and Tamil Nadu conclude.
India imports 88 per cent of its needs
India imports about 88 per cent of its crude oil needs, making it highly vulnerable to fluctuations in global prices. A significant portion of imports comes from the Middle East, Russia, and the United States. Despite this, India remains a net exporter of petroleum products. Despite the government’s excise duty cuts, current rates are around Rs 11.9 per litre for petrol and Rs 7.8 per litre for diesel. However, the report states that even if the excise duty is completely removed, it will not fully compensate for the losses incurred by oil companies.