India’s oil marketing companies (OMCs) are estimated to be losing around Rs. 5.3 bn a day as elevated global crude and product prices collide with unchanged domestic fuel prices, according to rating agency ICRA. Marketing margins are estimated at negative Rs. 8 per litre on petrol and negative Rs. 9 per litre on diesel, while domestic LPG under-recoveries stood at around Rs. 300 per cylinder in September 2026.

The Indian crude basket rose to $117.4 per barrel on September 21 from an average of about $66 per barrel in 2025-26. ICRA attributed the increase to the renewed US-Iran conflict, the shutdown of Saudi Arabia’s East-West pipeline and heightened Houthi activity in the Red Sea, which have tightened crude and product supplies.

With domestic retail fuel prices unchanged, OMCs have been unable to pass the full increase in international prices to consumers. ICRA said this would pressure profitability and cash flows while increasing short-term borrowing to fund higher working capital requirements. The impact on earnings in 2026-27 will depend on crude prices, product cracks, retail price revisions and government support for LPG losses.

The agency’s sensitivity analysis showed that marketing losses could remain substantial if crude stays above $100 per barrel, even after domestic fuel price increases. At Brent prices of $105-115 per barrel, annualised domestic LPG under-recoveries could reach about Rs. 1.03 tn if cylinder prices remain unchanged, while a Rs. 90 increase would still leave a shortfall of about Rs. 870 bn. At $115-125 per barrel, the shortfall could rise to Rs. 1.21 tn without a price increase.

The pressure on marketing contrasts with refining margins, which have remained strong. Singapore gross refining margins have stayed above $10 per barrel, supported by supply disruptions and elevated gasoline, gasoil and aviation turbine fuel cracks. The Special Additional Excise Duty offers OMCs some protection, but the cushion is insufficient to offset domestic marketing losses. ICRA also noted that India could diversify crude supplies through Guyana, Nigeria, the US and Brazil, although LPG sourcing would be more difficult because supply is concentrated among fewer countries.