Crude at $117; OMCs incur ₹8 per litre loss on petrol, ₹9 on diesel: ICRA

Oil marketing companies (OMCs) are currently incurring marketing losses of around ₹8 per litre on petrol and ₹9 per litre on diesel as domestic retail prices remain unchanged amid a sharp rise in crude oil prices, rating agency ICRA said on Wednesday.

The agency also estimated under-recoveries on domestic LPG at around ₹300 per cylinder in September 2026.

The losses have emerged following a spike in crude prices amid West Asia conflict and disruptions to the vital Strait of Hormuz, ICRA said in a report.

The daily loss to OMCs is estimated at around ₹530 crore, ICRA Senior Vice-President and Co-Group Head, Corporate Sector Ratings, Prashant Vasisht said.

“The escalation of the West Asian conflict and disruptions to key oil supply routes have led to a spike in crude prices in recent weeks, resulting in sizeable marketing losses and LPG under-recoveries for oil marketing companies,” Vasisht said.

The Indian crude basket rose to $117.4 per barrel on September 21, 2026, from an average of around $66 per barrel in 2025-26.

The rise was driven by the renewed US-Iran conflict, the shutdown of Saudi Arabia's East-West pipeline and heightened Houthi activities in the Red Sea.

ICRA said elevated crude prices coupled with unchanged domestic fuel prices would put pressure on the profitability and cash flows of OMCs and could also increase their short-term borrowings to meet higher working capital requirements.

The impact on OMC earnings in 2026-27 would depend on crude prices, product cracks, retail price revisions and government support for LPG under-recoveries, Vasisht said.

The estimated loss per domestic LPG cylinder stood at around ₹500 in the first quarter of 2026-27 and remained at around ₹300 in September.

ICRA said LPG under-recoveries could rise further if international prices remain elevated without a corresponding increase in domestic selling prices or additional government compensation.

The Special Additional Excise Duty (SAED) on diesel and aviation turbine fuel (ATF) was introduced from March 27, 2026, and subsequently extended to petrol as product prices increased.

For domestic supplies, SAED is adjusted in the refinery transfer price, reducing the effective product cost for the marketing divisions of OMCs.

The SAED has remained at ₹20 per litre on diesel and ₹15 per litre on ATF since September 16, 2026, reflecting strong product cracks, ICRA said.