OMCs hold petrol, diesel, LPG, ATF prices steady for domestic consumers, commercial LPG, bulk diesel see steep hikes

New Delhi: State-owned Oil Marketing Companies (OMCs) undertook a mixed price revision on Friday that left petrol, diesel, domestic LPG and ATF unchanged for domestic consumers, while sharply increasing commercial LPG, 5-kg cylinders and bulk diesel in response to the jump in global energy costs. The move shielded households and scheduled domestic airlines from any immediate rise, even as select industrial fuel categories were adjusted upward.

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A month after jet fuel prices for international airlines were more than doubled, the oil firms raised aviation turbine fuel (ATF) rates for foreign carriers by USD 76.55 per kilolitre, or 5.33 percent, to USD 1,511.86 per kl. At the same time, ATF for domestic airlines was left at Rs 1,04,927.18 per kl. The OMCs said that they would absorb the increase in global fuel prices to protect airlines and consumers.

Commercial LPG and 5-kg cylinders see steepest-ever jump

The biggest consumer-facing increase came in commercial LPG, used by hotels and restaurants, which was raised by Rs 993 to a record Rs 3,071.50 per 19-kg cylinder. Rates for 5-kg FTL, or market-priced LPG cylinders, were also pushed up sharply from Rs 549 to Rs 810.50 per bottle. The new 5-kg price now sits only slightly below the Rs 913 rate for a 14.2-kg domestic LPG cylinder used in household kitchens.

Bulk diesel, which is used by industrial consumers, such as telecom signal towers, was increased from about Rs 137 per litre to over Rs 149 a litre. That compares with the Rs 87.62 a litre retail price of diesel at petrol pumps. Prices, the report noted, continue to vary from state to state, depending on local taxes such as Value Added Tax (VAT).

Indian Oil says key fuels for the public remain untouched

Announcing the revisions, Indian Oil Corporation (IOC) said retail prices of petrol, diesel and household domestic LPG have not been changed, fully insulating domestic consumers from the latest increase in international fuel prices. IOC added that these fuels, along with kerosene, also unchanged, account for more than 80 percent of all fuels consumed in the country.

"Price revisions have been limited to select industrial segments, which constitute a relatively small share of overall consumption and are subject to routine monthly adjustments based on prevailing international prices," IOC said in a statement. It also said that "there has been no change in key fuels affecting the general public, retail prices of petrol and diesel remain unchanged for the general public, which constitutes around 90 percent of the total petrol, diesel consumption in the country. There is no change in the prices of domestic LPG (14.2 kg) for 33 crore domestic LPG consumers.

"There is no change in ATF prices for domestic airlines (scheduled operations) and no change in prices of PDS Kerosene," it said. Indian Oil added that about 80 percent of petroleum products saw no price change, while "Prices of bulk and commercial LPG cylinders (less than 1 percent of total consumption) have been revised," and "Prices of bulk diesel and ATF for international airline operations have been adjusted upward." It further said that around 4 percent of petroleum products saw a downward revision, and that "the measures reflect the calibrated and balanced approach adopted by oil marketing companies to align with global market trends while protecting domestic consumers and ensuring economic stability," it added.

Airlines, consumers and oil firms feel the impact of the global shock

The price action comes against the backdrop of a steep rise in global oil prices, which have climbed almost 50 percent after the war in West Asia disrupted energy supply chains. Petrol and diesel prices in India remain frozen after a Rs 2 per-litre reduction in March 2024; petrol currently costs Rs 94.72 per litre in Delhi and diesel Rs 87.62.

Airlines across the world are facing disruption amid tightening jet fuel supply triggered by the ongoing war in West Asia. The Strait of Hormuz, described in the report as a critical conduit for global energy flows, remains effectively closed as the conflict enters its third month, adding to supply-chain stress. In India, jet fuel prices were deregulated more than two decades ago and have since tracked benchmark international prices, according to a written understanding with airlines.

Under-recoveries to weigh on IOC, BPCL and HPCL

By keeping domestic fuel prices unchanged, state-owned Indian Oil, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) will inevitably book under-recoveries or losses on such sale of petrol, diesel, LPG and ATF. Ratings agency ICRA said in a recent report that OMCs are losing Rs 14 a litre on petrol and Rs 18 on diesel.

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Those under-recoveries on petrol, diesel and ATF will need to be offset against past earnings or against margins that oil companies earn when international prices soften. For domestic LPG, the government is likely to extend a subsidy to cover the losses.

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