Government oil marketing companies are facing huge losses due to no change in domestic fuel prices amid sharp increase in crude oil prices. According to rating agency ICRA, these big companies of the country are continuously incurring losses on the sale of petrol and diesel. Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) are incurring huge losses of around Rs 8 per liter on the sale of petrol and Rs 9 per liter on diesel. On the other hand, domestic LPG cylinders are also incurring a loss of about Rs 300 per cylinder in the month of September. ICRA says that putting all these together, government oil marketing companies are estimated to suffer a huge loss of about Rs 530 crore every day. Crude oil prices have been on fire in recent weeks due to rising geopolitical tensions in West Asia and supply disruptions.
Huge increase in crude oil prices
Prashant Vashishtha, Senior Vice President and Co-Group Head of Corporate Sector Rating at ICRA, has said in his report that due to increasing conflict in West Asia and blockage in major oil supply routes, a very sharp increase in the prices of crude oil has been recorded. According to ICRA data, there was a loss of about Rs 500 on each domestic LPG cylinder in the first quarter of the financial year 2026-27, which has come down to about Rs 300 per cylinder in the month of September. The price of the basket of crude oil that India imports increased directly to $ 117.4 per barrel on September 21, 2026, whereas in the last financial year 2025-26, it used to be around $ 66 per barrel on an average.
There is a huge impact on the profitability and cash flow of companies.
The most important thing is that despite strong refining margins, financial pressure continues on these oil companies. ICRA has informed that since the beginning of the crisis in West Asia, Singapore's gross refining margin has remained above $ 10 per barrel, which has received some support due to the closure of refineries, supply interruption and low inventory.
However, despite this, the high prices of crude oil and products are having a direct and adverse impact on the profitability and cash flow of OMCs (Oil Marketing Companies). Along with this, their working capital and short-term loan requirements to run their day-to-day operations are also increasing rapidly. The company also says that the impact on the earnings of the companies in the financial year 2026-27 will completely depend on the price of crude oil, product cracks, changes in domestic retail prices and the financial assistance provided by the government for LPG under-recovery.
Huge loss is being incurred on one gas cylinder
Domestic LPG has also become another big and growing cause of pressure for these companies. After the supply stoppage in West Asia, international LPG prices increased significantly, due to which the total negative LPG buffer increased to Rs 61,940 crore as of June 30.
ICRA estimates that the loss on every domestic cylinder was around Rs 500 in the first quarter of 2026-27 and around Rs 300 in September. Additionally, export levies that were imposed on diesel and aviation turbine fuel (ATF) in the month of March, and which were later extended to petrol as well, remain high. ICRA said that from September 16, the special additional excise duty on diesel was up to Rs 20 per liter and on ATF up to Rs 15 per liter.
On what main factors will future earnings depend?
Expert Prashant Vashishtha has clarified that due to high crude oil prices and no change in domestic fuel prices, there will be severe pressure on the profitability and cash flow of Oil Marketing Companies (OMCs). This will further increase their short-term debt burden to meet their increasing working capital needs.
The earnings position of OMCs in the coming times will completely depend on global crude oil prices, changes in retail prices and support from the government. At present, due to no change in domestic retail prices, the marketing margins of companies are running at – Rs 8 per liter on petrol and – Rs 9 per liter on diesel, while the under-recovery on domestic LPG in September 2026 remains around Rs 300 per cylinder.