Why India’s oil marketing companies are losing over Rs 500 crore daily

India's three public sector oil marketing companies (OMCs) – Indian Oil, Bharat Petroleum, and Hindustan Petroleum – are incurring substantial daily losses due to global crude oil price hikes and the lack of corresponding retail price increases. According to ICRA calculations, the OMCs are losing around Rs 9 per litre on diesel, Rs 8 per litre on petrol, and Rs 300 per cylinder on LPG.

Their combined daily fuel marketing losses amount to approximately Rs 530 crore. Should oil prices stay above $105 per barrel for the second half of the fiscal year and retail prices remain unchanged, the OMCs could face under-recoveries of over Rs 64,000 crore on petrol and diesel for 2026-27. If these elevated prices persist into the October-March period, LPG under-recoveries could reach up to Rs 1 lakh crore for the full financial year.

While the OMCs are benefiting from higher global fuel margins, these gains alone cannot fully offset their retail fuel sales losses. The three companies account for about 90% of India's petrol and diesel retail network and are the sole providers of LPG retail to households. With India consuming over 88% of its crude oil imports, the OMCs have only partially passed on the recent global price increases to consumers, resulting in heavy financial losses.