Petrol and Diesel Sold at Losses of ₹14 and ₹18 as Oil Firms Face Cost Surge

ICRA Limited has highlighted rising cost pressures across multiple sectors as global energy disruptions begin to impact domestic economics. 

Fuel Losses Driven by Crude Spike 

Oil marketing companies are currently facing negative marketing margins, with petrol sold at a loss of ₹14 per litre and diesel at ₹18 per litre.  

This gap has emerged as crude oil prices have increased to $120–125 per barrel, compared with $70–72 before the West Asia crisis, while retail fuel prices remain unchanged. 

Prashant Vasisht, Senior Vice President and Co-Group Head at ICRA, said “stable pump prices…are impacting the profitability,” indicating that margins remain under pressure at current price levels. 

LPG and Fertiliser Pressures Build Up 

The impact is also visible in LPG, where under-recoveries are expected to reach ₹80,000 crore in FY2027 if current trends continue.

Fertiliser subsidy requirements are projected to rise to ₹2.05–2.25 lakh crore, exceeding the budgeted ₹1.71 lakh crore. This is driven by higher input costs, including sulphur and ammonia, along with a rise in urea gas prices to about $19 per mmbtu in April 2026 from $13 earlier. 

Vasisht added that “raw material price inflation…is set to moderate the profitability,” pointing to limited cost pass-through and additional risks from weather conditions. 

Spillover Impact and Sector Outlook 

Disruptions in the Strait of Hormuz, which handles nearly 20% of global oil and LNG trade, have tightened supply and increased costs across oil marketing, fertilisers, chemicals and city gas distribution. 

Chemical and polymer prices have increased due to higher fuel costs and disrupted trade flows, with demand currently supported by stockpiling but expected to normalise later.  

In the city gas segment, compressed natural gas margins are under pressure, while piped natural gas for households remains relatively stable due to priority gas allocation. 

ICRA maintains a stable outlook for refining, while fuel retailing, fertilisers, basic chemicals and petrochemicals are expected to remain under pressure. Margin stress and weaker credit profiles are likely to persist until geopolitical conditions ease and supply chains stabilise. 

Read More: Crude Oil Prices Surge as US-Iran Conflict Stalemate Fuels Supply Concerns! 

Conclusion 

The ongoing rise in crude prices and supply disruptions is driving losses, increasing subsidy burdens and putting sustained pressure on profitability across sectors. 

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