The government will have to take a view at some point on how long public sector oil marketing companies (OMCs) can continue to suffer losses by selling major fuels below market price, Petroleum Minister Hardeep Singh Puri said Tuesday, but did not comment on whether a fuel price hike is on the cards.
While he assured that there are adequate stocks of petrol, diesel, and cooking gas for households in the country for regular supplies, Puri said that the global energy crisis due to the West Asia war and the consequent closure of the Strait of Hormuz is leading to significant financial strain for the OMCs, with combined losses of the three refiners-cum-fuel retailers projected at Rs 1 lakh crore in the April-June quarter at the current price levels.
“How long will the oil companies be able to take it? Frankly, that’s something that worries me. There have been times when the oil companies have done exceptionally well, (like) till recently. But the rate at which we are going, this one quarter of losses may wipe out the entire profit after tax of last year…Coming back to your question, how long can this happen? At some stage, the government will have to take a view on that,” Puri said at the CII Annual Business Summit 2026 in the capital.
In a bid to insulate consumers from high prices, the three OMCs—Indian Oil, Bharat Petroleum, and Hindustan Petroleum—have not hiked regular petrol and diesel prices despite the global oil and fuel price surge due to the West Asia war. In fact, prices of the two automobile fuels have not been hiked for over four years now—since April 2022. As for LPG sold to households as a cooking fuel, the last price hike was in early March, and was only a fraction of the actual price escalation in the international market.
The OMCs are estimated to be incurring daily losses worth about Rs 1,000-Rs 1,200 crore, which means that if the status quo on prices persists, they could be staring at combined losses of about Rs 1 lakh crore for the first quarter of 2026-27 (FY27). While the OMCs have not announced their FY26 earnings yet, highly placed sources said that their cumulative profit for the year could be about Rs 76,000 crore.
Puri also said that Prime Minister Narendra Modi’s recent appeal for conservation of petroleum fuels among other measures suggests a long-term approach to ease the West Asia war-induced fiscal strain , and is in no way indicative of any restriction on fuel consumption. He added that the country has maintained adequate fuel stocks on an ongoing basis—about 60 days worth of petrol and diesel, and 45 days of LPG for households. The PM’s appeal had been interpreted by some as an indication of fuel rationing.
“He (Modi) has made a visionary statement saying that look, if this continues you have to start thinking in terms of measures required to be taken to lessen the fiscal strain. That is the point,” Puri said, adding that there was “no cause for anxiety”.
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On Monday, Petroleum Secretary Neeraj Mittal had also said that there was no plan to ration fuel supplies in the country. “Many countries have done rationing…India has been a kind of an oasis of comfort. No rationing has been done…There is no need to panic. There are sufficient supplies. There is no rationing in place. It’s not going to happen,” Mittal had said.
Deliberations around potential fuel price hikes have picked up pace within the government in recent days, it is learnt. Moreover, the government currently has no plan to compensate the OMCs for their losses on sale of petrol, diesel, and jet fuel below market prices, which was being seen as an indication that a price increase might be coming.
While the retail prices of petrol and diesel are deregulated, in practice, the government-owned OMCs—with 90% market share in fuel retail—have kept prices stable in consultation with the government. They incur heavy losses when international oil prices surge, and earn hefty profits when the prices slump.
With the effective halt in vessel movements through the Strait of Hormuz—from where one-fifth of global oil and natural gas flows usually transited—global energy supplies have been hit and prices have skyrocketed. India depends heavily on oil and gas imports to meet its energy needs, and fuel prices in the country are linked to global oil and fuel price benchmarks.
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While the government had slashed excise duty by Rs 10 per litre on petrol and diesel late March to blunt the impact of high international prices on the OMCs, the retailers continue to bleed heavily on fuel sales. The excise duty cut has resulted in the government foregoing revenue of about Rs 14,000 crore a month, Petroleum Ministry Joint Secretary Sujata Sharma had said on Friday.
The timing of the current global surge in prices, which clashed with assembly elections in some states, made it politically fraught for the prices to be hiked. With the elections now over, a hike in prices of fuels like petrol, diesel, and the domestic LPG could be in the offing in the coming days or weeks, highly placed sources in the government had earlier said.
Petrol is currently priced at Rs 94.77 per litre in Delhi, and diesel at Rs 87.67 per litre. Domestic LPG is priced at Rs 913 per 14.2-kg cylinder in the capital. Fuel prices vary across states due to differences in state levies.
Oil prices have been extremely volatile since the West Asia war began. The Indian crude oil basket, which averaged $70 per barrel last year, averaged over $113 in April. Furthermore, Indian refiners are incurring high additional costs due to emergency crude sourcing and a surge in shipping and insurance rates, among others.
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The West Asia crisis has led to retail fuel price surges in a number of countries, with some even forced to ration fuel supplies. There has been no rationing of petrol and diesel in India, although it was done for commercial and industrial LPG in order to prioritise cooking gas supplies to households.
Unlike petrol and diesel, in which India is self-sufficient and is also a net exporter, the country depends on imports to meet 60% of its LPG requirement, 90% of which depended on the Strait of Hormuz. In the case of crude oil, India’s import dependency is much higher at about 88%, with about 40% of the imports coming via the Strait of Hormuz.
