LPG Subsidies and Rising Crude Prices Keep Oil Firms Under ₹600 Crore Daily Pressure

India’s state-owned oil marketing companies continue to battle heavy financial pressure despite multiple fuel price hikes, as elevated global crude oil prices linked to the Iran conflict keep input costs high. While recent increases in petrol and diesel prices have eased the burden to some extent, public sector fuel retailers are still collectively losing close to ₹600 crore per day .

According to Sujata Sharma , Joint Secretary in the Ministry of Petroleum and Natural Gas , the combined losses on the sale of petrol, diesel, and domestic LPG have reduced significantly after four rounds of fuel price revisions since May 15 . Before the hikes were introduced, oil companies were reportedly suffering losses of nearly ₹1,000 crore daily .

The government-owned fuel retailers raised petrol and diesel prices by a cumulative ₹7.5 per litre in an effort to narrow the widening gap between soaring international crude oil prices and domestic retail rates. Despite these revisions, the companies continue to incur substantial under-recoveries, particularly in the subsidised cooking gas segment.

While petrol and diesel are deregulated products with market-linked pricing, domestic LPG cylinders remain subsidised for households. The government compensates oil companies for part of the difference between the actual procurement cost and the subsidised retail selling price. However, sustained volatility in global crude markets has increased the overall financial strain on the sector.

The crisis intensified after international crude oil prices surged more than 50 per cent amid escalating geopolitical tensions involving Iran and instability in global energy supply chains. During the early phase of the price shock, public sector oil companies kept retail fuel prices largely unchanged to shield consumers from an immediate inflationary impact. This decision, however, forced the firms to absorb massive daily losses.

To protect their balance sheets, oil companies have now adopted a strategy of phased fuel price hikes, daily market monitoring, refinery optimisation, and diversified crude sourcing. The Centre and oil firms are also coordinating closely on subsidy support and pricing decisions to balance consumer interests with the long-term financial sustainability of India’s energy sector.