State-run oil marketing companies are suffering due to no change in domestic fuel prices amid sharp rise in crude oil prices. According to rating agency ICRA, losses to companies on sale of petrol and diesel are steadily increasing. On sale of petrol to Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) around Rs. 8 per liter on diesel and Rs. 9 is being damaged. At the same time, domestic LPG cylinders are losing around Rs 300 per cylinder in September. ICRA said that at these levels, the state-run oil marketing companies would be earning around Rs. 530 crore is expected to be a loss. Crude oil prices have risen sharply in recent weeks amid rising geopolitical tensions and supply disruptions in West Asia.
Prashant Vashisht, senior vice-president and co-group head of corporate sector ratings at ICRA, said in the report that rising conflict in West Asia and disruptions in key oil supply routes have led to a sharp rise in crude oil prices. According to ICRA, in the first quarter of the financial year 2026-27, each domestic LPG cylinder will cost around Rs. 500, which fell in September to Rs. 300 per cylinder. The price of the basket of crude oil that India imports rose to $117.4 per barrel on September 21, 2026, while it averaged around $66 per barrel in 2025-26.
The point is that even though refining margins are strong, there is a lot of pressure on companies. Singapore’s gross refining margin has remained above $10 a barrel since the start of the Middle East crisis, supported by refinery shutdowns, supply disruptions and low inventories, ICRA said. ICRA said higher prices of crude oil and products are expected to affect the profits and cash flows of OMCs (Oil Marketing Companies) and also increase their short-term credit requirements for working capital. The company said the impact on earnings in the 2026-27 financial year will depend on crude oil prices, product cracks, changes in domestic retail prices and government support for LPG under-recovery.
LPG is also another growing cause of pressure. The total negative LPG buffer as of June 30 was Rs. 61,940 crore was reached. ICRA estimates that the loss per domestic cylinder in the first quarter of 2026-27 will be around Rs. 500 and in September Rs. It was around 300. Export levies imposed in March on diesel and aviation turbine fuel (ATF), which were later extended to petrol, remain high. The special additional excise duty on diesel was Rs 20 per liter and ATF was Rs 15 per liter from September 16, ICRA said.
Vashishth said higher crude oil prices and no change in domestic fuel prices will pressure the profitability and cash flow of oil marketing companies (OMCs). This will also increase their short-term borrowings for growing working capital requirements. The impact on OMCs’ earnings in 2026-27 will depend on crude oil prices, product cracks, changes in retail prices and government support for LPG under-recovery. He further said that due to no change in domestic retail prices so far, the marketing margin of OMCs on petrol is Rs. 8 and on diesel Rs. 9 per litre, while the under-recovery on domestic LPG in September 2026 is estimated to be around Rs. 300 per cylinder.
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