Losses on petrol have widened to ₹18 per litre and to ₹35 on diesel as state-owned fuel retailers continue to keep pump prices frozen despite a sharp rise in input costs, sources said.
Despite prices being deregulated more than a decade back, state-owned , and have not changed the retail petrol and diesel price since April 2022.
have seen sharp fluctuations over this period – from above $100 per barrel following the Russia-Ukraine war, to easing to around $70 a barrel earlier this year, before surging again to about $120 last month after the US-Israel attacks on Iran triggered fresh supply concerns.
The three firms were incurring losses of about ₹2,400 crore per day at the peak last month, which have since narrowed to around ₹1,600 crore daily after the government cut excise duty on petrol and diesel by ₹10 per litre each – a reduction that was not passed on to consumers but used to partly offset losses, industry sources said.
The losses in March have wiped away all gains they made in January/February, they said, adding the three firms are most likely to post losses in the January-March quarter.
Macquarie Group, in a report on ‘India Fuel Retail’, said, “At spot petrol-diesel pricing of $135-165 per barrel, we estimate India’s oil marketing companies lose ₹18 and ₹35 per litre on petrol and diesel sales (respectively).” Every $10 per barrel increase in crude adds roughly ₹6 per litre to marketing losses, the report said.
The brokerage flagged a high likelihood of retail fuel price hikes after elections in key states like West Bengal and Tamil Nadu at the end of this month.
“We see risk of higher pump prices post state elections in April.” India, which imported about 88 per cent of its crude oil requirement in 2025, remains highly exposed to global price swings. Around 45 per cent of imports came from the Middle East, 35 per cent from Russia and 6 per cent from the United States. Despite this, the country continued to be a net exporter of key petroleum products, including diesel, petrol and aviation turbine fuel.
While the government cut excise duty on fuels by ₹10 per litre in March, central levies have been on a declining trend and now stand at ₹11.9 per litre on petrol and ₹7.8 per litre on diesel.
Even a complete removal of excise duties would not fully offset OMC losses at current prices, the report noted.
State-level VAT rates, however, have largely remained stable.
The fiscal implications of further tax cuts could be significant. Based on provisional consumption estimates of about 170 billion litres in FY26, a full rollback of excise duties could lead to an annual revenue loss of around $36 billion, widening the fiscal deficit by an estimated 80 basis points, it said.
The contribution of fuel excise duties to government revenue has already declined to about 8 per cent in FY26 from 22 per cent in FY17, and now accounts for less than a fifth of the fiscal deficit, down from a peak of 45 per cent.
Higher crude prices also pose a risk to India’s external balances. The current account deficit, which was near balance in mid-2025, is expected to widen to around $20 billion in the first quarter of 2026. A sustained $10 per barrel rise in crude could expand the deficit by roughly 30 basis points of GDP, assuming no policy response, the Macquarie report said.
Earnings visibility for OMCs remains uncertain, with every $1 per barrel change in crude prices impacting EBITDA by about 5 per cent. The sector’s break-even crude price is estimated at $80-85 per barrel.
Given the outlook, Macquarie Group said it prefers utilities over oil marketing companies in the near term.