India’s oil marketing companies (OMCs) are facing a tough situation. They are losing nearly Rs 30,000 crore each month because of the ongoing crisis in West Asia. This situation has made it difficult for vessels to pass through the Strait of Hormuz, a crucial route for oil transport.
According to Sujata Sharma, the Joint Secretary in the Petroleum Ministry, companies like Indian Oil, Bharat Petroleum, and Hindustan Petroleum are struggling with losses on petrol, diesel, and LPG sales. Despite a cut in excise duty by Rs 10 per litre in late March to help manage high international prices, the situation remains dire. The government is missing out on about Rs 14,000 crore a month in revenue due to this tax cut.
The losses do not even account for the rising prices of Aviation Turbine Fuel (ATF), which have soared since the conflict involving Iran, Israel, and the US heightened. To help, the government has limited monthly increases in ATF prices to 25%.
Sujata Sharma explained that while OMCs are incurring heavy losses, the government is making efforts to keep consumer prices stable. “Reducing excise duty has an impact of nearly Rs 14,000 crore per month,” she noted.
Currently, India imports around 88% of its crude oil and relies heavily on the Strait of Hormuz for these supplies. Before the crisis, roughly 90% of India’s LPG and nearly half of its natural gas came from this area.
As cargo movement has slowed, the country is facing a sharp spike in international energy prices. Crude prices have jumped from about $70 to nearly $120 per barrel in just two months. LPG prices are also up, with the Saudi Contract Price reaching around $780 per tonne.
Despite these increases, retail fuel prices in India haven’t changed since February 28. In April alone, OMCs reported daily losses of roughly Rs 18 per litre on petrol and Rs 25 on diesel, adding up to average losses of Rs 600-700 crore per day. However, domestic LPG prices have risen by Rs 60, with commercial LPG climbing over Rs 1,000 per cylinder.
Additional burdens include the costs of sourcing emergency crude, higher shipping charges due to longer routes, and increased insurance premiums.
On the other side of the Strait, 13 Indian-flagged vessels remain stranded. This includes an LPG tanker, five crude oil tankers, and various other ships, further complicating the supply situation.
With the crisis impacting both the economy and energy security, many are keeping an eye on the government’s next steps. As energy prices continue to rise globally, experts warn that sustainable solutions will be essential for the future.
For more insights on the global oil market and its trends, you can refer to reports by the International Energy Agency.
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Petrol price,diesel price,OMCs
