OMCs Incurring Losses Due to West Asia Conflict

New Delhi: The government on Thursday admitted that oil marketing companies (OMCs) in the country are currently incurring significant losses on fuel sales as global crude oil prices surge amid the ongoing West Asia conflict, even as retail fuel prices remain unchanged.

“Oil marketing firms are facing under-recoveries of about Rs 24 per litre on petrol and Rs 104 per litre on diesel. The government has reduced excise duty to keep prices stable, and part of the burden is also being borne by our oil marketing companies. Currently, there is an under-recovery of about Rs 24 per litre on petrol and Rs 104 per litre on diesel,” Sujata Sharma, joint secretary in the oil ministry, said, while addressing reporters at an inter-ministerial briefing here.

As crude oil prices play a key role in weighing the loss and profit of the oil firms, the sharp rise in crude prices has increased the cost of fuel production significantly since the beginning of the conflict in West Asia. Brent crude oil prices have surged sharply from around $65 per barrel to now trading above $100 per barrel. However, as retail prices in the domestic market have not been raised, OMCs are absorbing the difference, leading to losses on every litre of fuel sold.

Despite the challenging global environment, the government has assured that fuel supply remains stable across the country. “Our retail outlets are operating normally and the crude supplies have been secured for the next sixty days, and inventories are sufficient,” she said, adding that refineries in the country are operating at maximum capacity.

Addressing concerns about sulphur supply, she also clarified that there is no shortage. “Since our refineries are operating at maximum capacity, there is no shortage of sulfur. On the natural gas front, the government assured uninterrupted supply to domestic consumers. The supply of natural gas to domestic consumers is 100 percent assured,” Sharma said, highlighting the ongoing efforts to expand piped natural gas (PNG) infrastructure across the country.