PETROL-DIESEL PRICE Hike: The ongoing conflict between the US and Iran has severely disrupted the Strait of Hormuz, impacting global trade. Crude oil prices in the global market are steadily rising, a trend that is now translating into higher petrol and diesel prices.
Petrol and diesel prices in India are also consistently increasing; rates have already been hiked four times so far. Despite this, petroleum companies continue to operate at a loss. Overall, state-owned oil companies are still incurring a loss of approximately ₹5.50 per litre on petrol and ₹4.50 per litre on diesel.
These companies are facing a combined daily loss exceeding ₹550–600 crore, a situation that has raised concerns among experts.
How much more expensive could petrol and diesel get?
ICRA and financial analysts believe that for oil companies to reach a ‘no-profit, no-loss’ position, retail prices might need to be raised by another ₹5 per litre.
While analysts deem this hike necessary, the government is refraining from immediately allowing oil companies to pass on the full cost increase to consumers to keep retail inflation in check. As an alternative, the government has attempted to shoulder some of the burden itself by cutting excise duty.
Crude Oil Prices
India imports approximately 85% of its crude oil requirements. Currently, Brent crude is hovering around $92–95 per barrel. This price level is manageable for Indian oil companies, meaning there is no immediate need for them to raise retail prices.
Pressure on oil companies to hike prices typically arises when crude oil crosses the $100-per-barrel mark and remains at that level for several weeks. Currently, no such critical situation exists.
