New Delhi, Apr 15 (BNP): Rising global crude oil prices are expected to put significant pressure on domestic fuel rates, with petrol prices projected to increase by up to ₹18 per litre and diesel by ₹35 per litre, according to a report by foreign brokerage firm Macquarie. Despite the sharp rise in crude prices, retail fuel rates in India have remained largely unchanged, leading to mounting losses for oil marketing companies (OMCs).
Mounting Losses for Oil Companies
The report indicates that OMCs are currently incurring losses of around ₹18 per litre on petrol and ₹35 per litre on diesel. At their peak last month, the combined daily losses of the three major OMCs were estimated at approximately ₹2,400 crore. Following a ₹10 cut in excise duty, these losses have moderated to about ₹1,600 crore per day. Analysts note that for every $10 increase in crude oil prices, losses rise by nearly ₹6 per litre.
Price Revision Likely After Elections
Amid sustained financial strain, oil companies may consider revising fuel prices after the conclusion of elections in five states, including West Bengal, sources said. Any such increase could have a cascading impact on transportation costs and overall inflation.
High Import Dependence Raises Concerns
India imports nearly 88% of its crude oil requirements, making it highly vulnerable to global price fluctuations. Of this, around 45% is sourced from the Middle East and about 35% from Russia. Elevated crude prices also pose a risk to India’s Current Account Deficit (CAD), which is projected to widen by up to $20 billion in the first quarter of 2026.
Declining Excise Duty Share
The contribution of excise duty on petroleum products to government revenue has declined significantly—from 22% in FY2017 to around 8% currently. Experts point out that even a complete removal of excise duty may not fully offset the current losses faced by oil companies.
Global Fuel Prices on the Rise
Fuel prices are climbing globally amid elevated crude oil rates. In the United States, average petrol prices have crossed $4 per gallon for the first time since August 2022. Several neighbouring countries, including Pakistan, Nepal and Sri Lanka, have also raised petrol and diesel prices in recent weeks.
Outlook
Experts warn that continued volatility in global crude markets could necessitate further upward revisions in domestic fuel prices. The resulting inflationary pressures may impact both consumers and businesses in the coming months.
