Athira Sethu
Kochi, 24 Sep 2026
Oil Marketing Companies (OMCs) are incurring huge losses as petrol and diesel prices have not been hiked in India despite the rise in crude oil prices.
As per the estimates of rating agency ICRA, the oil companies are currently incurring losses of around ₹8 per litre of petrol and ₹9 per litre of diesel. They are supplying fuel at present retail rates despite an increase in crude oil rates.
ICRA had also estimated that the loss incurred by oil companies in September 2026 would be around ₹300 per domestic LPG cylinder due to rising crude oil rates due to the war in West Asia and disruption in the supply chain.
ICRA Senior Vice President Prashant Vasisht had informed that the oil companies are incurring daily losses of about ₹530 crore for petrol and diesel sales.
The crude oil basket of India rose to $117.4 per barrel in September 21, 2026 which is significantly higher than the average price of about $66 per barrel in 2025-26.
As per ICRA, there were higher crude prices due to the new war between the US and Iran, closure of Saudi Arabia’s East-West pipeline, and activities of the Houthis in the Red Sea region.
The effect of higher crude prices along with stable petrol and diesel prices might affect the profits and cash flow of OMCs. ICRA added that there could be an increase in borrowing from the short term due to the requirement of increased finance for working capital management purposes.
There are many aspects which would affect the profitability of OMCs during 2026-27. These aspects include crude oil prices, refining margins, changes in retail fuel prices, and the assistance of the government to compensate for LPG losses.
The loss on the sale of each LPG cylinder was estimated at ₹500 in the first quarter of 2026-27. The loss has remained at ₹300 per cylinder till September 2026.
ICRA indicated that LPG losses may escalate further if there is no reduction in international LPG prices and no increase in the domestic sale price. ICRA stated that LPG losses will increase if there is no further compensation provided by the government.
The government has imposed a Special Additional Excise Duty (SAED) on certain petroleum products. The SAED was levied on diesel and Aviation Turbine Fuel (ATF) from March 27, 2026, and it was extended to petrol.
The SAED has remained unchanged at ₹20 per litre for diesel and ₹15 per litre for ATF since September 16, 2026. As per ICRA, SAED shows the strength of petroleum product prices.
In conclusion, increasing cost of crude oil and stable domestic fuel prices have affected Indian oil marketing companies financially.
