India’s state-run oil companies are losing nearly Rs 1,600-1,700 crore every day to shield consumers from rising global fuel prices amid the ongoing Middle East crisis.
As per Economic Times, the combined under-recovery of public sector oil marketing companies has crossed Rs 1 lakh crore in just 10 weeks as global crude oil prices continue to surge.
The government-owned oil firms have continued supplying petrol, diesel and LPG at prices lower than actual market-linked costs despite a sharp rise in international crude oil prices following tensions in West Asia.
State-run oil firms under pressure
The three major oil marketing companies, Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited, are reportedly facing record-high under-recoveries. Under-recovery refers to the gap between the actual cost of fuel and the price at which it is sold to consumers.
Despite crude oil prices rising by nearly 50 per cent globally, petrol and diesel prices in India have remained largely unchanged for almost two years. Petrol continues to retail at around Rs 94.77 per litre and diesel at Rs 87.67 per litre in Delhi.
Also Read | Will TVK enter INDIA bloc? Vijay-Rahul bonhomie steals attention at Tamil Nadu swearing-in ceremony
LPG prices have also remained below actual cost levels even after a recent price increase. The mounting losses are putting severe financial pressure on oil companies.
Middle East conflict driving energy shock
The financial burden comes amid ongoing geopolitical tensions in West Asia that have disrupted global energy markets and pushed crude oil prices higher. Shipping disruptions and fears around oil supply routes, especially through the Strait of Hormuz, have further increased concerns about global energy security.
India imports nearly 88 per cent of its crude oil requirements, making the country highly vulnerable to fluctuations in international oil prices. Analysts have warned that prolonged instability in the region could increase inflationary pressure and impact India’s economic outlook.
Concerns over future fuel price hikes
Oil companies may eventually require additional borrowing to manage working capital needs and maintain fuel supplies. Questions are also being raised over how long the current pricing structure can continue without retail fuel price hikes.
Also Read | NCRB report 2024: India recorded one rape every 18 minutes, nearly 50 crimes against women every hour
While India has so far managed to avoid major domestic fuel shocks compared to several other countries, experts believe the situation could become difficult if global crude prices remain elevated for a longer period.
