Oil firms selling petrol at `14 litre loss, diesel at `18

Oil marketing companies are selling petrol and diesel at a loss of `14 per litre and `18 per litre, respectively, as elevated crude prices outpace capped retail fuel rates, squeezing marketing margins.

Besides losses on petrol and diesel, the elevated energy prices post West Asia crisis are likely to leave companies with an under recovery of `80,000 crore on cooking gas LPG in the current fiscal, while fertiliser subsidy is projected to rise to `2.05 to 2.25 lakh crore.

Rating agency Icra said supply disruptions in the Strait of Hormuz — handling around 20 per cent of global oil and LNG trade — have tightened availability of fuels, fertilisers and chemicals, pushing up prices and increasing cost pressures across downstream industries. Crude prices before the West Asia crisis broke out two months back were around $70-72 a barrel.

“The stable pump prices for auto fuels amid elevated crude oil prices are impacting the profitability of the oil marketing companies (OMCs),” said Prashant Vasisht, Senior Vice President and Co-Group Head, Icra.

“At crude prices of $120-125 per barrel, marketing margins on petrol and diesel are estimated to be negative `14 a litre and `18 per litre, respectively.” Icra estimates LPG under-recoveries could reach `80,000 crore in FY2027, if current trends persist, while the fertiliser subsidy burden is projected to rise to `2.05-2.25 lakh crore, above the budgeted `1.71 lakh crore.