- Analysts estimate fuel prices may need to rise further to offset current losses faced by OMCs.
- Elevated crude oil prices are reportedly causing substantial daily losses despite recent fuel price revisions.
State-run oil marketing companies (OMCs) may need to increase petrol and diesel prices by as much as Rs 12 per litre to fully offset their current losses, according to analysts. The assessment comes despite four consecutive hikes in auto fuel prices that were introduced in recent weeks.
The latest estimates indicate that fuel retailers continue to face significant under-recoveries as global crude oil prices remain elevated, putting pressure on their profitability and pricing strategies.
Petrol and Diesel Still Being Sold Below Cost
Analysts estimate that OMCs are currently incurring a marketing loss of around Rs 5.5 per litre on petrol and Rs 4.5 per litre on diesel. These losses persist even after the recent revisions in retail fuel prices.
The gap between the selling price of fuel and the cost incurred by oil companies has widened due to sustained strength in crude oil prices. As a result, the recent hikes have not been sufficient to restore profitability for fuel retailers.
Up to Rs 12 Per Litre Increase May Be Required
To fully compensate for current losses, analysts believe fuel prices may need to be increased by up to Rs 12 per litre. Such an adjustment would help oil marketing companies recover the financial impact of selling petrol and diesel below their effective costs.
The estimate highlights the scale of the challenge facing fuel retailers as they navigate a volatile global energy market. Any future decision on fuel price revisions is likely to depend on crude oil trends and broader market conditions.
High Crude Prices Continue to Pressure Fuel Retailers
According to analyst estimates, OMCs are currently suffering a combined daily loss of approximately Rs 550 crore because of elevated crude oil prices. The continued pressure from international oil markets has significantly increased procurement costs for fuel retailers.
As long as crude prices remain at current levels, oil marketing companies may find it difficult to eliminate losses without additional price adjustments. The situation is being closely watched by industry observers, given its potential implications for both company finances and fuel consumers.
Outlook Remains Linked to Global Oil Market Trends
The trajectory of fuel prices in the coming weeks will largely depend on movements in global crude oil markets. While recent hikes have provided some relief, analysts suggest that a larger increase may be necessary if current market conditions persist.
For now, OMCs continue to absorb substantial losses, underscoring the challenges facing India's fuel retail sector amid elevated energy costs.