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Fuel prices surge: Retailers face massive daily losses
25 May
Summary
- State-run fuel retailers lose nearly Rs 600 crore daily.
- Recent price hikes only partially offset higher crude oil costs.
- Government forgoes Rs 14,000 crore monthly in excise revenue.
Public sector fuel retailers in India are incurring daily losses close to Rs 600 crore, officials reported on May 25, 2026. This situation persists despite multiple retail price revisions for petrol and diesel throughout May 2026. These increases aim to narrow the gap between domestic rates and surging international crude oil prices.
Officials indicated that these hikes have only partially offset the financial under-recoveries for companies such as Indian Oil Corporation. The pressure on state-owned retailers intensifies due to sustained volatility in global energy markets and concerns over supply disruptions.
Simultaneously, the government's finances are strained. Reductions in excise duty on petrol and diesel, implemented to cushion consumers from high fuel inflation, mean the Centre is foregoing nearly Rs 14,000 crore monthly in revenue. This delicate balancing act highlights the challenges policymakers face in managing inflationary pressures and the financial health of oil marketing companies.
India imports over 85% of its crude oil, making its refiners and fuel retailers vulnerable to elevated Brent crude prices. While private retailers adjust prices more aggressively, public sector firms have historically moderated increases, leading to significant under-recoveries during high crude price phases.
