Government-owned oil marketing companies — Indian Oil Corporation, Hindustan Petroleum, and Bharat Petroleum — are still bleeding roughly ₹600 crore a day even after the fourth consecutive hike in petrol and diesel prices announced on 25 May, a senior government official confirmed. The losses persist as soaring global crude prices continue to outpace domestic retail adjustments.

Scale of the Losses

Before the latest round of price revisions, the three public sector oil companies were collectively accumulating losses of ₹1,000 crore per day. The 25 May hike — which raised petrol by ₹2.61 per litre and diesel by ₹2.71 per litre — has trimmed that figure, but under-recoveries remain 'slightly less than ₹600 crore per day', according to Sujata Sharma, Joint Secretary in the Ministry of Petroleum. The cumulative increase across the four hikes now stands at nearly ₹7.50 per litre for both fuels, following the resumption of daily price revisions after a prolonged freeze.

India's Hike vs Global Price Surge

'If you look at the global level, the price increase is in the range of 22 per cent for motor spirit (petrol) and 27 per cent for high-speed diesel,' Sharma noted. In contrast, India's retail increases amount to only 7.7 per cent for petrol and 8.6 per cent for diesel — a fraction of the international movement. Prior to raising retail prices, the government had already cut excise duty on both fuels by ₹10 per litre, resulting in a revenue foregone of ₹14,000 crore, she added.

Crude Prices: The Root Cause

Data from the Ministry of Petroleum's Planning and Analysis Cell shows that the average price at which Indian refiners imported crude oil surged to $107.84 per barrel in May, up sharply from $69.01 per barrel in February — before the outbreak of the conflict that has since roiled energy markets. Benchmark Brent crude has been especially volatile: it fell to around $90 a barrel on 17 April after a temporary ceasefire was announced, only to spike to $126.41 a barrel on 30 April amid fears of renewed hostilities. The monthly average for April settled at around $117 a barrel.

LPG Losses Add to the Pressure

Beyond auto fuels, domestic LPG sales are compounding the pain. Prashant Vasisht, Senior Vice President and co-group head of corporate ratings at ICRA, said under-recoveries remain 'stubbornly high' due to mounting losses on subsidised cooking gas, even as retail petrol and diesel prices have been partially corrected. Retail auto fuel prices had remained largely unchanged since early April 2022, steadily eroding the profit margins of state-owned oil firms over that period.

Government's Position Going Forward

Sharma emphasised that meeting domestic market requirements remains the government's foremost priority, and that oil companies will continue sourcing crude that is 'technically and commercially fitting' for their refineries. The government has not indicated any immediate further hike, though analysts warn that sustained crude prices above $100 a barrel will keep under-recoveries elevated for the foreseeable future.