India’s oil marketing companies, commonly known as OMCs, are facing growing financial pressure as crude oil prices have increased sharply in recent weeks. According to rating agency ICRA, these companies may be losing around ₹530 crore every day because domestic prices of petrol, diesel and LPG have not changed in line with the rise in international oil prices.
The situation becomes easier to understand when the business model of fuel companies is considered. OMCs purchase crude oil from international markets, process it in refineries and then sell petrol, diesel and other products in India. When the cost of crude oil rises but retail fuel prices remain unchanged, the difference directly affects their earnings.
ICRA said that marketing companies are currently facing negative margins on petrol and diesel. The pressure is also visible in the LPG business, where companies are dealing with under-recoveries. This means that the selling price of LPG may be lower than the actual cost involved in supplying it.
The problem has become more serious because crude oil prices have remained volatile amid geopolitical tensions and concerns over global supplies. Uncertainty in West Asia has affected the international oil market, while supply disruptions and fears of tighter availability have pushed prices higher. The Indian crude oil basket, which reflects the average cost of crude purchased by India, rose to around $114.70 per barrel on September 21, 2026. This was a sharp increase from nearly $86.06 per barrel in March 2026.
The impact is visible in the financial performance of OMCs. ICRA estimated that the combined net revenue loss of major marketing companies could reach nearly ₹16,940 crore during the first half of the financial year 2026-27. The estimated loss for the full financial year could be around ₹30,000 crore if domestic fuel prices continue to remain unchanged.
LPG is adding another layer of difficulty. ICRA estimated that LPG under-recoveries may rise to nearly ₹9,440 crore in the first half of the year and about ₹30,000 crore for the full year. These losses could increase further if international prices remain high and the rupee weakens against the US dollar.
The financial pressure may also affect the ability of OMCs to invest in new projects, maintain infrastructure and manage borrowings. ICRA noted that support from the government and timely compensation could become important for protecting the financial position of these companies.
For consumers, unchanged fuel prices may appear helpful in the short term. However, prolonged pressure on OMCs could eventually influence fuel pricing, government support and the overall energy market. The coming months will largely depend on crude oil prices, global supply conditions and policy decisions on petrol, diesel and LPG prices.
