NEW DELHI, SEPTEMBER 23, 2026 : State-run oil marketing companies (OMCs) — Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) — are facing mounting pressure on their fuel marketing margins as international crude oil prices surge while domestic petrol and diesel prices remain unchanged, according to rating agency ICRA.
ICRA estimates that the three major OMCs are currently incurring a loss of around ₹8 per litre on petrol and ₹9 per litre on diesel. Domestic LPG is also adding to the pressure, with under-recoveries estimated at approximately ₹300 per cylinder in September 2026.
Daily Loss Estimated at ₹530 Crore
According to ICRA, the combined impact of negative petrol and diesel marketing margins and LPG under-recoveries has pushed the estimated daily loss of the OMCs to around ₹530 crore.
The sharp deterioration in marketing margins comes against the backdrop of a steep rise in international crude oil prices, driven by escalating geopolitical tensions and disruptions to key supply routes in West Asia.
India’s crude oil import basket rose to approximately USD 117.4 per barrel on September 21, 2026, compared with an average of around USD 66 per barrel during 2025-26.
West Asia Crisis Drives Crude Higher
ICRA said the escalation of the West Asian conflict and disruptions to major oil supply routes have contributed significantly to the surge in crude prices.
The factors cited include the renewed US-Iran conflict, the reported shutdown of Saudi Arabia’s East-West pipeline and heightened Houthi activity in the Red Sea.
“Elevated crude prices and unchanged domestic fuel prices would put pressure on profitability and cash flows of oil marketing companies,” ICRA said.
Refining Margins Offer Some Support
Despite the pressure on fuel marketing margins, refining margins have remained comparatively strong.
ICRA said Singapore gross refining margins have remained above USD 10 per barrel since the beginning of the West Asia crisis, supported by refinery outages, supply disruptions and inventory drawdowns.
However, higher crude and petroleum product prices are expected to put pressure on OMC profitability and cash flows. Companies may also need to increase short-term borrowings to meet higher working-capital requirements.
LPG Under-Recoveries Add to the Burden
LPG has emerged as another major source of financial pressure for the oil companies.
ICRA estimated that the cumulative negative LPG buffer had reached approximately ₹61,940 crore as of June 30, 2026, following a rise in international LPG prices amid supply disruptions in West Asia.
The estimated loss on each domestic LPG cylinder was around ₹500 during the first quarter of 2026-27, while the under-recovery stood at approximately ₹300 per cylinder in September 2026.
Government Policy and Fuel Prices Key to Outlook
ICRA said the impact on OMC earnings during 2026-27 will depend on several factors, including:
- International crude oil prices
- Petroleum product cracks
- Domestic retail fuel price revisions
- Government support for LPG under-recoveries
- Refining margins and supply conditions
Export levies on petroleum products have also remained elevated. ICRA noted that the Special Additional Excise Duty on diesel stood at ₹20 per litre and on aviation turbine fuel (ATF) at ₹15 per litre from September 16, 2026.
₹530 Crore Daily Pressure on OMCs
With domestic retail prices remaining unchanged so far, ICRA’s assessment puts the current marketing margins at approximately negative ₹8 per litre for petrol and negative ₹9 per litre for diesel, alongside LPG under-recoveries of about ₹300 per cylinder.
ICRA senior vice president and co-group head of corporate sector ratings Prashant Vasisht said sustained elevated crude prices could increase pressure on OMC profitability, cash flows and short-term borrowing requirements.
The financial impact on the companies will ultimately depend on how long crude prices remain elevated, the movement in refining and product margins, domestic retail price adjustments and the extent of government support for LPG.
Key Figures at a Glance
Crude import basket: USD 117.4/barrel
2025-26 average: Around USD 66/barrel
Petrol marketing loss: ₹8/litre
Diesel marketing loss: ₹9/litre
LPG under-recovery: Around ₹300/cylinder
Estimated daily OMC loss: ₹530 crore
Negative LPG buffer: ₹61,940 crore as of June 30, 2026
Diesel SAED: ₹20/litre
ATF SAED: ₹15/litre
