New Delhi: New Delhi: State-run oil marketing companies (OMCs) are estimated to be losing around Rs 530 crore every day as surging crude oil prices and unchanged domestic petrol and diesel rates squeeze marketing margins, rating agency ICRA said.
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Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are currently estimated to be losing Rs 8 per litre on petrol and Rs 9 per litre on diesel. Under-recovery on domestic LPG stood at around Rs 300 per cylinder in September, ICRA said.
“At these levels, the daily loss to the OMCs is estimated at Rs 530 crore,” the rating agency said.
The pressure follows a sharp rise in global crude prices amid escalating geopolitical tensions and supply disruptions in West Asia.
The Indian basket of crude oil climbed to USD 117.4 per barrel as of September 21, 2026, compared with an average of around USD 66 a barrel in 2025-26.
ICRA attributed the surge to the renewed US-Iran conflict, shutdown of Saudi Arabia's East-West pipeline and heightened Houthi activity in the Red Sea.
“The escalation of the West Asian conflict and disruptions to key oil supply routes have led to a spike in crude prices,” said Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Sector Ratings, ICRA.
The squeeze on marketing margins comes even as refining margins remain relatively strong.
Singapore gross refining margins have remained above USD 10 per barrel since the West Asia crisis began, supported by refinery outages, supply disruptions and inventory drawdowns, ICRA said.
However, elevated crude and petroleum product prices are expected to put pressure on OMC profitability and cash flows. The companies could also require higher short-term borrowings to meet increased working capital requirements.
ICRA said the eventual impact on OMC earnings in 2026-27 would depend on crude prices, product cracks, revisions in domestic retail fuel prices and government support towards LPG under-recoveries.
Domestic LPG has emerged as another major source of stress for the oil marketers.
The cumulative negative LPG buffer stood at Rs 61,940 crore as of June 30 following an increase in international LPG prices amid supply disruptions in West Asia.
ICRA estimated under-recovery on a domestic LPG cylinder at around Rs 500 during the first quarter of 2026-27, which moderated to around Rs 300 per cylinder in September.
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Meanwhile, export levies on petroleum products have remained elevated. The Special Additional Excise Duty stood at Rs 20 per litre on diesel and Rs 15 per litre on aviation turbine fuel (ATF) from September 16, ICRA said.
“Elevated crude prices and unchanged domestic fuel prices would put pressure on profitability and cash flows of OMCs,” Vasisht said, adding that the situation would also increase their short-term borrowing requirements.
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