The Rs. 3/liter for petrol and diesel hike on the price of petrol and diesel will provide limited relief to oil marketing companies, opine industry analysts. According to Prashant Vasisht, senior vice President and co-Group head of ICRA, despite the hike, companies such as Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited continue to incur losses of about Rs 500 crore daily on the sale of auto fuels and domestic LPG. Oil marketing companies (OMCs) on Friday raised the prices of petrol and diesel by Rs3 per litre across the country, while compressed natural gas (CNG) prices for automobiles were increased by Rs2 per kg.
“ICRA estimates that at crude price of $105-110/barrel and considering past 10-year average crack spreads of auto fuels, oil marketing companies incur a loss of about Rs 500 crore daily on the sale of auto fuels and domestic LPG, even after factoring the fuel price hike. Accordingly the oil marketing companies would need to relook at the retail prices in case elevated crude oil prices persist,” said Vasisht.
According to the Petroleum Planning & Analysis Cell (PPAC) figures for the 2025-26 fiscal year, India consumed 94 MMT of diesel and 42.6 MMT of petrol. A Rs3 per litre price hike across these segments is projected to generate about Rs 50,529 crore in additional annual revenue for oil marketing companies. On a monthly basis, this adjustment provides a fiscal cushion of about Rs 4,210 crore, with diesel contributing the lion's share at Rs2,773 crore.
Meanwhile, the petroleum ministry estimates that oil companies are currently losing nearly ₹20 per litre on petrol sales and around ₹100 per litre on diesel due to elevated global crude prices and unchanged domestic retail prices since the war. The under-recoveries of OMCs are expected to touch nearly ₹2 lakh crore in the first quarter of FY27, while projected losses could rise to around ₹1 lakh crore.
Sehul Bhatt, Director, Crisil Intelligence, is of the view that at their peak, oil marketing companies were absorbing losses of Rs 23-30 per litre on petrol and diesel, translating into a combined daily loss of Rs 1,300-1,400 crore across petrol, diesel and LPG. However, government intervention through excise duty relief of Rs 10 per litre narrowed these to Rs 14 and Rs 17 per litre on petrol and diesel, respectively, reducing the daily loss run rate to around Rs 1,000 crore. Therefore, the Rs 3 hike, alongside a marginal softening in crude prices, brings estimated residual under-recoveries down to Rs 10 and Rs 13 per litre, offering OMCs a degree of operational breathing room.
Meanwhile, Maharashtra government reduced the VAT on Aviation Turbine Fuel (ATF) from 18% to 7% for a period of six months (effective until November 14, 2026). This move was designed to keep airfares stable despite the West Asia crisis and ensure Mumbai remains a competitive aviation hub compared to Delhi (which maintains 25% VAT on ATF).
