India’s Oil Companies Absorb ₹30,000 Crore Losses Amid West Asia Crisis

Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have reportedly absorbed estimated losses of around ₹30,000 crore since mid-March after continuing uninterrupted fuel supplies across India without increasing petrol, diesel or LPG prices despite a sharp rise in crude oil costs, as per the PTI report. 

OMCs Continue Fuel Supply Despite Sharp Cost Surge 

The 3 state-run oil marketing companies continued supplying petrol, diesel, LPG, aviation turbine fuel and other petroleum products even as the West Asia conflict disrupted global energy markets and increased input costs by more than 50%. 

The conflict severely affected shipping movement through the Strait of Hormuz, a critical route for a large share of India’s energy imports. Panic buying during the period also pushed domestic fuel demand sharply higher, stretching supply networks across the country. 

Despite these pressures, there were no supply shortages, price hikes or fuel rationing measures implemented in India.  

As per the report, the companies together incurred under-recoveries of nearly ₹30,000 crore since mid-March. Under-recoveries refer to the gap between rising input costs and retail selling prices. 

Government Measures Helped Limit Losses 

According to sources, losses could have climbed to nearly ₹62,500 crore had the government not reduced excise duties on petrol and diesel by ₹10 per litre each.  

The special additional excise duty on petrol was reduced to ₹3 per litre from ₹13 per litre, while diesel excise duty was brought down to zero from ₹10 per litre.  

At peak crude price levels, the government’s effective absorption of fuel costs was estimated at around ₹24 per litre for petrol and ₹30 per litre for diesel.  

Retail fuel prices in India have remained unchanged since February 28 despite significant volatility in international crude oil markets. 

Crude Oil Spike and Financial Pressure on OMCs 

Brent crude was trading near $72 per barrel before the United States and Israel launched strikes on Iran on February 28, escalating tensions across West Asia.  

As the conflict intensified and tanker movement through the Strait of Hormuz faced disruptions, Brent crude prices surged sharply and briefly touched levels close to $144 per barrel after Iran retaliated and shut the route, disrupting parts of global oil transit.  

During April, daily under-recoveries were estimated at around ₹18 per litre for petrol and ₹25 per litre for diesel, translating into daily losses of nearly ₹600-700 crore for oil marketing companies. 

The companies also faced additional expenses linked to emergency crude sourcing, higher freight costs, vessel diversions, elevated marine insurance premiums and refinery optimisation requirements. The situation added pressure on balance sheets and refining margins across the sector. 

India Maintains Stable Fuel Prices Amid Global Volatility 

While several countries witnessed sharp fuel price increases following the global energy shock, India maintained stable retail prices. 

Petrol prices reportedly increased around 34% in Spain, 30% in Japan, Italy and Israel, 27% in Germany and 22% in the United Kingdom. Several economies also introduced fuel rationing measures, conservation advisories, emergency subsidies and price caps during the crisis. 

In India, petrol prices remained at ₹94.77 per litre while diesel prices stayed at ₹87.67 per litre without mobility restrictions or supply disruptions.  

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Conclusion 

The developments highlight the significant financial burden absorbed by India’s state-run oil marketing companies as the country prioritised fuel supply stability and consumer protection during one of the most volatile global energy disruptions in recent years. 

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