The Union Government has announced to raise the Petrol and Diesel prices by Rs 3 per litre amid the continuous rising crude oil prices that has led to rigorous
losses to the Oil Marketing Companies (OMCs), up to an estimate of Rs 1000 crore per day. On Monday, the Indian rupee fell to an all-time low amid the Iran war that led to soaring global bond yields, and denting the risk appetite. The rupee fell to 96.18 per dollar, down 0.2% on the day and eclipsing its previous all-time of 96.1350. As per the latest report released by the SBI Research, the Rs 3 per litre increase in petrol and diesel prices is expected to help OMCs recover around Rs 52,700 crore in the Financial Year 2027. However, the total losses for OMCs could still remain close to Rs 3.6 lakh crore if global crude oil prices stay elevated. Brent crude prices have surged more than 50% since the onset of Iran War in late February. According to Union Petroleum Minister Hardeep Singh Puri, the OMCs were suffering losses of nearly Rs 1,000 crore per day because of rising crude costs. After the recent price hike of Rs 3 per litre by the government, Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings. ICRA Ltd. said, "The modest hike in retail price of Rs. 3/liter for petrol and diesel provides limited relief to the oil marketing companies."
More fuel price hikes soon?
In its report, the SBI Research said that assuming crude oil prices at $106 per barrel and an average exchange rate of Rs 94 per dollar, the landed cost of crude works out to nearly Rs 9,964 per barrel. The recent Rs 3 per litre fuel price hike gives OMCs an estimated benefit of around Rs 477 per barrel.
If the rupee weakens by another Rs 2 and moves closer to 96 against the dollar, the cost of importing the same crude oil rises sharply in rupee terms. That effectively wipes out the gains OMCs receive from the fuel price hike.
While speaking with Times Now Digital, Prashant Vasisht said, "As per our estimates, the OMCs under the revised price regime still to suffer losses of Rs 7.5 per litre on petrol and Rs 3.2 per litre on diesel on a daily basis," he said.
On the question of more price hikes in the future, he said, "if the crude oil price continue to uptick, the OMCs and government are likely to go for another price hike as the hike of Rs 3 Per litre will not be enough to recover the losses."
