Petrol Diesel Price Hike: A research report by the country’s largest government bank, State Bank of India, says that if the rupee weakens further against the US dollar, then increasing the prices of petrol and diesel can completely eliminate the profits of oil companies.
Relief from increase in fuel prices
According to SBI’s Ecowrap report, the increase of Rs 3 per liter in the prices of petrol and diesel is expected to provide big relief to the government oil companies. With this, the loss incurred by the companies due to under-recovery, i.e. selling fuel at a price below the cost, can be reduced by about Rs 52,700 crore. According to the report, this amount is about 15% of the total estimated loss for the financial year 2026-27.
Impact of West Asia crisis
Government oil marketing companies on Friday increased the prices of petrol and diesel citing the ongoing tension in West Asia and the sharp rise in international crude oil prices as the reasons. Rising crude oil prices directly impact import-dependent countries like India, as they require higher foreign exchange expenses.
Rupee weakness a big concern
The report says that if the rupee weakens further, the cost of importing crude oil will increase rapidly. As a result, any gains from rising fuel prices may be wiped out. According to SBI, if the rupee depreciates by just ₹ 2 from its current level, the extra income of oil companies will be wiped out only due to the cost of imports.
Rupee at record low
During Friday’s trading, the rupee fell below 96 against the dollar. Ultimately, it closed at a record low of 95.81 per dollar. It has been said in the report that the rupee has already reached such a level where further fall can increase the problems for the oil companies.
Huge loss to oil companies
The report quoted Petroleum Minister Hardeep Singh Puri as saying that government oil companies are incurring a loss of about ₹1,000 crore every day. On an annual basis, this loss could reach approximately ₹3.6 lakh crore.
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