Under-recoveries on petrol at oil marketing companies (OMCs) have fallen 83 per cent to ₹3 per litre from ₹24 per litre recorded on 1 April, according to data presented by Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas, on Monday, 15 June. The sharp easing reflects a combination of four phased fuel price revisions in May and fiscal support extended by the Centre to oil retailers battling elevated global crude prices.

How Far Under-Recoveries Have Fallen

Diesel under-recoveries have similarly declined by 75 per cent, dropping to ₹27 per litre from ₹105 per litre as of 1 April. By May, aggregate OMC losses had narrowed to roughly ₹600 crore per day following the fourth round of price increases — an improvement from nearly ₹750 crore per day reported on 18 May.

The Four-Round Price Revision in May

The Centre implemented phased fuel price hikes on 15 May, 19 May, 23 May, and 25 May, collectively raising petrol prices in Delhi from ₹94.77 per litre to ₹102.12 per litre. Diesel in the national capital rose from ₹87.67 per litre to ₹95.20 per litre over the same period. In the last week of May, the government approved an average increase of ₹2.7 per litre, a move that was expected to cut overall OMC losses by at least 44 per cent.

Government's Revenue Sacrifice and Excise Relief

Alongside the price revisions, the Centre absorbed a significant portion of the financial burden by reducing excise duties on petrol and diesel. According to government figures, this resulted in a revenue sacrifice of approximately ₹1.23 lakh crore over a period of 78 days, helping shield consumers from the full scale of rising global fuel costs. The fiscal intervention was central to preventing a sharper pass-through to retail prices.

Global Crude Prices Ease on Hormuz Development

Adding to the improving outlook, global crude oil prices declined by nearly 5 per cent on Monday after the United States and Iran reached an agreement and announced the reopening of the Strait of Hormuz. The development eased concerns over potential disruptions to global energy supplies — a key variable that had kept crude elevated and pressured OMC margins in recent months.

What This Means Going Forward

The convergence of domestic price corrections, excise relief, and softening global crude creates the most favourable OMC margin environment since early April. Notably, this is the first time petrol under-recoveries have fallen to single digits since the current cycle of losses began. Whether further price rationalisation — upward or downward — follows will depend on how crude markets respond to the Hormuz agreement in the coming sessions.