Pranjul Bhandari, Chief India Economist at HSBC, said on Tuesday, 9 June that further retail fuel price increases remain a real possibility if global crude oil costs stay elevated and India's import bill continues to weigh on oil marketing companies. Her comments arrive as domestic energy pricing policy faces fresh scrutiny amid volatile international crude markets.

The Pressure on Oil Marketing Companies

Bhandari pointed to India's landed cost of crude oil imports — running at approximately $110 per barrel in recent weeks — as the core stress point. At that level, she said, oil distribution companies are absorbing significant losses. The government has already responded by cutting excise duty on fuel, taking on a substantial portion of the burden itself.

'The landed cost of oil imports in India in the last month or so has been about $110 a barrel. And I think at those levels, there is a lot of losses that the oil distribution companies are making. Now, the government has taken a big part of that share. It has cut excise duty on oil,' Bhandari said.

Why Retail Prices May Rise Further

Retail fuel prices have already been raised by ₹7.50 per litre, but Bhandari argued the adjustment has not gone far enough to distribute the burden equitably. She suggested an increase of ₹10–12 per litre would have more fairly split the impact between the government and consumers.

'But some of the share of that burden has to also be taken by consumers. And retail prices have been increased by seven and a half rupees per litre. My sense is retail prices can be increased a little more,' she said. 'I would have asked for about 10 to 12 rupees per litre, because that would have shed the burden of the global price shock more equitably between the government and the consumer sector.'

She added that if the current crisis persists, additional hikes cannot be ruled out. 'A little bit more price hike from here could be in the cards if this crisis continues and if our imported oil bill remains as high,' Bhandari noted.

Government's Acknowledgement of OMC Stress

Her assessment aligns with an official acknowledgement earlier in the week. Praveen Khanooja, Additional Secretary in the Ministry of Petroleum and Natural Gas, told a media briefing in New Delhi that oil marketing companies (OMCs) are facing daily under-recoveries — including losses on liquefied petroleum gas (LPG) sales — estimated at ₹600–700 crore per day. Khanooja attributed the losses to the sharp gap between retail selling prices and international fuel costs.

Broader Context and What Comes Next

This is not the first time India has faced a difficult balancing act between shielding consumers from global energy shocks and protecting the financial health of state-run OMCs. The current episode echoes the 2021–22 cycle, when retail prices were frozen for months before a sharp correction became unavoidable. Notably, the Centre's excise duty cuts have already narrowed its own fiscal headroom, making further government absorption of losses increasingly difficult to sustain.

With global crude markets remaining unpredictable, all eyes will be on the government's next move — whether it opts for a calibrated retail price revision or holds the line at the cost of deeper OMC stress.