High crude oil prices cost OMCs ₹530 crore daily on fuel sales

India's oil marketing companies are bleeding losses due to elevated international crude oil prices, with daily underrecoveries estimated at ₹530 crore, according to ratings agency Icra. The gap between cost and retail prices has widened substantially, with petrol underrecoveries hitting ₹8 per litre and diesel at ₹9 per litre in September.

Underrecoveries occur when oil companies are unable to pass on the full cost of crude oil to consumers due to government price controls and retail pricing restrictions. The magnitude of current losses underscores the financial strain faced by state-owned marketers, which absorb the difference between procurement costs and government-regulated selling prices.

The surge in underrecoveries reflects the persistent pressure on global crude markets, which has kept prices elevated despite intermittent fluctuations. With crude remaining stubbornly high, the cumulative financial impact on OMCs continues to mount, potentially affecting their balance sheets and operational efficiency.

The situation highlights the ongoing challenge of fuel pricing in India, where retail prices remain subject to government regulation. As international crude prices fluctuate, the gap between market costs and regulated domestic prices creates significant fiscal pressures on state-backed oil companies, which bear the burden of subsidizing consumer fuel costs.