Three public sector oil marketing companies (OMCs) are incurring an under-recovery of approximately ₹30,000 crore per month on account of selling petrol, diesel and LPG below the cost price, a senior oil Ministry official said here on Friday.
Three oil marketing companies – Indian Oil, Hindustan Petroleum and Bharat Petroleum – have not revised prices of petrol and diesel since the beginning of war in West Asia. However, prices of domestic LPG and commercial LPG have been revised, but still the end consumer prices are still low.
“Oil marketing companies are buying crude, gas and LPG at higher cost, but in order to protect consumers, they are selling final products at lower cost. They are incurring an under-recovery of ₹30,000 crore,” Sujata Sharma, Joint Secretary in the Oil Ministry, said during inter ministerial meeting here. She also highlighted that government lowered Central excise duty on petrol and diesel which is costing ₹14,000 crore every month.
Meanwhile, sources said there not been Central excise cut, “estimated OMC under-recoveries during mid-March to end-April would have surged to ₹62,500 crore.”
Special duty cut
Earlier last month, government lowered special additional excise duty by ₹10 a litre on petrol and diesel. They also highlighted that government absorption per litre at peak Brent on petrol was ₹24 and ₹30 a litre on diesel.
Brent crude — the world’s most traded oil benchmark — was hovering around $72 per barrel before the US and Israel launched strikes on Iran on February 28, triggering a sharp escalation in West Asia tensions. Prices then surged as the conflict widened and shipping risks intensified in the Strait of Hormuz, with reports of disrupted tanker movement and heightened supply fears.
At the peak of the escalation, Brent briefly jumped to levels near $144 per barrel as Iran retaliated and closed the Strait, effectively freezing parts of global oil transit and amplifying volatility across energy markets. Due to no revision of retail prices, they said that daily under-recoveries during April were estimated at about ₹18 per litre on petrol and ₹25 per litre on diesel, translating into average losses of ₹600-700 crore a day for OMCs
Additional costs
The companies also faced additional costs from emergency crude sourcing, higher freight charges due to vessel diversions, elevated marine insurance premiums and refinery optimisation expenses. Despite these pressures, fuel and LPG supplies remained uninterrupted across the country. The surge in crude prices and the decision to shield consumers from higher retail prices placed significant strain on OMC balance sheets and refining margins, sources said while adding that the measures reflected a policy decision to prioritise consumer stability and economic continuity during a global energy shock.
Sources warned that a prolonged period of elevated crude prices could lead to higher working capital borrowings and force some recalibration of capital expenditure plans. However, investments linked to refining expansion, energy security infrastructure, ethanol blending, biofuels and transition fuels would continue with government backing, they said.
India‘s approach contrasted with measures adopted by several other economies, where fuel prices rose sharply after the conflict-driven energy shock. Petrol prices increased by about 34 per cent in Spain, 30 per cent in Japan, Italy and Israel, 27 per cent in Germany and 22 per cent in the UK, according to the estimates. Several countries also introduced rationing, conservation advisories, emergency relief packages or fuel caps.
“Oil marketing companies are buying crude, gas and LPG at higher cost, but in order to protect consumers, they are selling final products at lower cost. Sujata Sharma,Joint Secretary, Oil Ministry
Published on May 8, 2026