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India Fuel Retailers Face Losses Amid Crude Cost Surge
9 Apr
Summary
- Fuel retailers incur losses of Rs 21/litre on petrol and Rs 28/litre on diesel.
- Global energy infrastructure damage is expected to impact gas markets until 2027.
- Government's excise duty cut offers only temporary relief to retailers.
Indian fuel retailers are currently experiencing substantial under-recoveries, amounting to Rs 21 per litre for petrol and Rs 28 per litre for diesel. This financial strain arises from efforts to maintain stable consumer prices amidst significant global energy market volatility and disruptions.
Recent geopolitical events have led to a sharp increase in crude oil and LNG prices, with global refining capacity significantly reduced due to infrastructure damage. Analysts predict these market pressures will persist, potentially impacting the global gas market through 2026-27.
While the government enacted an excise duty cut on March 27, this measure has provided only short-term relief. The elevated global refining margins, exacerbated by ongoing geopolitical risks, continue to challenge the earnings of state-run oil marketing companies.
Experts suggest that maintaining crude oil prices within the $90-$95 per barrel range would be the most beneficial outcome for India's energy sector, helping to avoid severe revenue shocks associated with price fluctuations.
