New Delhi: Even though global crude oil prices have come down in recent weeks, India’s oil marketing companies (OMCs) are still facing heavy losses on the sale of petrol and diesel.
According to a report by ICICI Securities, OMCs lost ₹18.9 per litre on diesel and ₹6 per litre on petrol during the April–June quarter.
Margins have changed sharply
The brokerage said the situation was very different a year ago.
During the same quarter last year, oil and gas companies earned a marketing margin of ₹8.2 per litre on diesel and ₹10.3 per litre on petrol.
However, in the latest quarter, the sharp rise in international crude oil and refined fuel prices was not fully passed on to consumers through higher retail fuel prices. As a result, the companies’ marketing margins turned negative.
How petrol and diesel prices are decided
The price consumers pay at petrol pumps includes several different costs.
The base price is linked to international prices of refined fuel. Oil companies then add transportation and logistics costs, distribution expenses, dealer commissions, taxes, and retail margins before fixing the final retail price.
Any change in these components affects the companies’ profits.
Why companies are making losses
ICICI Securities said the main reason for the losses was the gap between rising international fuel prices and unchanged retail prices in India during the April–June period.
When global fuel prices increase but petrol pump prices remain stable, oil companies earn lower margins or even make losses.
On the other hand, if international prices fall while retail prices stay unchanged, companies usually earn higher profits.
Government estimates large losses
Petroleum and Natural Gas Minister Hardeep Singh Puri recently said that oil marketing companies suffered losses of around ₹75,000 crore during the quarter.
He said the losses came from selling petrol, diesel, LPG, and aviation turbine fuel (ATF) below market-linked prices.
Strong margins of previous years disappear
The current losses have reversed the strong retail margins seen over the last two financial years.
According to ICICI Securities, petrol marketing margins had reached a peak of ₹12 per litre in the third quarter of FY2025, while diesel margins touched ₹8.2 per litre in the first quarter of FY2026.
The latest quarter shows how quickly market conditions can change when global fuel prices move faster than domestic retail fuel prices.
