India’s state-run oil marketing companies are facing significant losses, nearing ₹30,000 crore each month. They’ve maintained stable prices for petrol, diesel, and LPG, despite rising global energy costs due to ongoing conflicts in West Asia.
Crude oil prices jumped from around $70 to almost $120 per barrel in just two months, primarily due to disruptions and increased risks in shipping through the Strait of Hormuz. Sujata Sharma, a joint secretary in the ministry of petroleum and natural gas, mentioned that the government intends to protect consumers from price hikes despite the instability in international markets. “Our aim has been to prevent price increases for consumers,” she said.
Recently, the losses amounted to approximately ₹700-1,000 crore a day, with under-recoveries pegged at about ₹18 per liter for petrol and ₹25 for diesel. Such sustained losses could impact the finances of companies like Indian Oil, Bharat Petroleum, and Hindustan Petroleum, yet investments in refining and energy security will continue with government support.
India relies heavily on oil imports, with around 40% coming from West Asia. The ongoing conflict has underscored this vulnerability, especially after the U.S. and Israel’s military strikes on Iran escalated tensions, resulting in disrupted tanker movements.
In response to rising costs, the Indian government reduced excise duties to ease the burden. For instance, the excise duty on petrol was lowered from ₹13 to ₹3 per liter, and diesel duty was cut entirely. Without these measures, the losses could have soared to nearly ₹62,500 crore.
Interestingly, while India fought hard to keep prices stable, global fuel prices saw sharp increases. For example, in the same time frame, petrol prices spiked by 34% in Spain and 27% in Germany.
In looking at the global picture, many countries, including Japan and the UK, faced steep price hikes, making India’s situation unique. By managing these prices carefully, India has avoided some of the most severe consequences seen in other markets.
As we navigate this ongoing energy crisis, it becomes clearer that government intervention plays a crucial role, balancing consumer protection with the realities of fluctuating global markets. Understanding these dynamics is essential for grasping not just India’s economic landscape, but also the broader implications of international conflicts on energy prices.
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