Oil marketing companies (OMCs) are estimated to be losing around Rs. 5.3 bn a day as higher crude oil and LPG prices widen losses on petrol, diesel and domestic LPG, rating agency ICRA said. Domestic retail prices have remained unchanged despite the sharp increase in international energy prices.

ICRA estimated OMC marketing margins at negative Rs. 8 per litre for petrol and negative Rs. 9 per litre for diesel. Under-recoveries on domestic LPG were estimated at around Rs. 300 per cylinder in September 2026, while the cumulative negative LPG buffer rose to Rs. 619.4 bn as of June 30, 2026.

The Indian crude basket reached $117.4 per barrel on September 21, compared with an average of around $66 per barrel in 2025-26. The increase followed heightened geopolitical tensions, the renewed US-Iran conflict, the shutdown of Saudi Arabia’s East-West pipeline and increased Houthi activity in the Red Sea.

ICRA said elevated crude prices combined with unchanged domestic fuel prices would pressure OMC profitability and cash flows, while increasing short-term borrowing requirements for working capital. The effect on OMC earnings in 2026-27 will depend on crude prices, product cracks, retail price revisions and government support for LPG under-recoveries.

The estimated loss on each domestic LPG cylinder was around Rs. 500 in the first quarter of 2026-27 and remained close to Rs. 300 in September. ICRA said LPG under-recoveries could increase further if international prices stay high without higher domestic selling prices or additional government compensation.

Singapore gross refining margins have remained above $10 per barrel since the West Asia crisis began, supported by supply disruptions, inventory drawdowns and refining outages. The government introduced Special Additional Excise Duty, or SAED, on diesel and aviation turbine fuel from March 27, 2026, and later extended it to petrol. SAED stood at Rs. 20 per litre on diesel and Rs. 15 per litre on aviation turbine fuel from September 16, helping reduce effective product costs for OMC marketing divisions.