The ₹3 per litre hike in the prices of petrol and diesel implemented on Friday is expected to yield an additional monthly revenue of a little more than ₹4,400 crore for India’s oil marketing companies (OMCs), a rough calculation based on their past sales figures shows.

Earlier this week, Union Petroleum Minister Hardeep Puri had stated that India’s OMCs are bearing losses of ₹1,000 crore per day, from petrol, diesel and LPG combined, as they seek to hold retail fuel prices steady at a time when oil prices are surging due to the West Asia crisis.

The calculations of the expected additional revenue due to Friday’s price hikes implies that the latest hike will fall short of covering these losses being incurred by Indian OMCs at present. According to experts, there is room for more price hikes.

Consumption calculation

India consumed approximately 497 crore litres of petrol and 986 crore litres of diesel in April, according to provisional government data.

Therefore, based on these sales figures, the ₹3 per litre hike would earn the OMCs an addition ₹1,491 crore from the sale of petrol and ₹2,958 crore from the sale of diesel — taking the total revenue addition to ₹4,449 crore in a month.

According to Sourav Mitra, Partner for Oil & Gas at Grant Thornton Bharat, there remains clear headroom for further hikes.

More hikes possible

“From a forward-looking perspective, there remains clear headroom for further calibrated price hikes, should the prices remain elevated and should the government decide to reduce OMCs’ burden further,” he stated.

“However, any such adjustments are likely to be phased and policy-sensitive, carefully balancing inflationary risk with broader macroeconomic considerations,” Mr. Mitra added.

The Ministry of Petroleum and Natural Gas has also said on multiple occasions there is proposal in consideration to bail out the OMCs during the current crisis. Thus, leaving fuel price hikes the only option. .

India’s consumption of petrol grew 6.36% compared to the same month last year, whilst that of diesel stayed nearly flat — rising only 0.25% — during the same period.

Further, amidst the escalating tensions, Brent Crude futures had scaled a four-year high of $126.41 per barrel on April 30.

In fact, as of Friday evening, Brent Crude futures were trading about 2.35% higher than their previous close at $108.2 per barrel.