Union Petroleum Minister Hardeep Singh Puri has officially confirmed that state-run oil marketing companies incurred losses of ₹74,781 crore on fuel sales up to June 30 due to the West Asia conflict, as reported by Business Standard. Speaking to reporters, Puri explained that the losses were directly linked to the sharp rise in international crude prices during the geopolitical tensions, even as fuel continued to be sold domestically at prices below cost. The minister noted that although global crude prices have eased in recent weeks, the impact of the earlier surge is still being felt because refiners are processing crude purchased when prices were significantly higher. Oil companies generally procure crude around two months in advance, meaning the crude currently being refined was largely bought in April and early May when international benchmark prices had risen sharply amid geopolitical tensions.
According to the latest data from Business Standard, state-run oil marketing companies incurred an under-recovery of ₹2.19 trillion on the sale of petrol, diesel and liquefied petroleum gas (LPG) up to June 30. In the quarter ended June 30 (Q1FY27), the OMCs' under-recovery stood at ₹19,905 crore for petrol, ₹1.44 trillion for diesel and ₹24,148 crore for LPG. The OMCs' under-recovery for LPG from previous quarters was ₹30,720 crore, as reported by Business Standard. An oil retailer's under-recovery is the difference between the selling price and the cost price of a refined product, while losses measure the overall financial performance, including both profits and losses on all refined products.
India's state-run oil marketing companies have repeatedly demonstrated their strategic value during national emergencies, according to reports from Business Standard, The Times of India, and The Hindu BusinessLine. When unprecedented floods submerged Chennai in 2015, Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) scrambled to move fuel through alternative routes, restore inundated depots and keep emergency services supplied even as roads disappeared under water and retail outlets shut. During the Covid-19 pandemic, the companies operated virtually uninterrupted despite nationwide lockdowns, with fuel stations remaining open, refineries continuing operations with skeletal staff, and LPG cylinders delivered to millions of households under strict mobility restrictions. As per The Times of India, engineers remained stationed inside refineries for weeks to keep production running, while tanker drivers and LPG delivery personnel continued operations through curfews and containment zones.
Regarding potential price reductions, Puri indicated that such discussions would become relevant if crude oil prices remain at lower levels over the coming weeks, as reported by Business Standard. Even as crude oil prices have sharply declined to $72 a barrel from highs of $120 a barrel in April, Puri said the OMCs are still incurring under-recoveries on the sale of LPG cylinders. To offset mounting losses, Indian oil retailers had cumulatively raised petrol prices by ₹7.38 a litre and diesel prices by ₹7.52 a litre since May 15, marking the first fuel price hike in four years. The increases were implemented as the companies continued to sell fuel at lower prices to domestic consumers despite soaring global energy prices.
India's comprehensive energy infrastructure proved crucial during the crisis, with decades of strategic investments creating a robust supply chain. According to Business Standard, India has 24 refineries and 22 ports, with every refinery stocked and every port having cargoes coming in, leaving and floating cargoes. When adding what the country has in ports, terminals, refineries and SPRs (strategic petroleum reserves), India has at least 76-80 days of stock. Puri emphasized that the country needs to increase its storage capacity for better management of supply disruptions in the future. Highly dependent on imports, India sources around 90 per cent of its crude oil requirements, 50 per cent of its liquefied natural gas (LNG) and 60 per cent of its LPG requirements from the global market, as reported by Business Standard.
