Rising prices narrow losses for fuel retailers as West Asia oil threatens | Today’s news
New Delhi: India’s state-owned oil marketing companies (OMCs) have cut losses on selling petrol and diesel below market rates. ₹6 a ₹30 per liter after the recent price hike.
The daily under-recovery for OMCs, including losses from sales of liquefied petroleum gas (LPG), ranges from ₹600-700 crore, Praveen Khanooja, additional secretary in the petroleum and natural gas ministry, said at a press conference in the state capital on Monday.
The ongoing war in West Asia, where Iran and Israel traded airstrikes again after an April 8 ceasefire, has disrupted global oil supplies, sending energy prices soaring.
At a time when global LPG prices have soared and the country is facing supply shortages, the government has reduced the number of cylinders provided to low-income consumers under the Pradhan Mantri Ujjwala Yojana to four from the earlier nine.
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“There is probably insufficient use of diesel ₹30 per liter. When you buy diesel in Delhi for ₹95, actually the balance ₹30 is borne by the company and in gasoline it is approx ₹6 per liter even now. And daily losses are still high ₹600-700 crore,” Khanooja said.
Under-recovery refers to the notional loss incurred by oil marketing companies – when they sell petroleum products domestically at prices lower than international rates.
In a statement on March 27, the petroleum ministry said the underutilization of gasoline was approx ₹26 per liter and ₹81.90 per liter of diesel. According to the government, the insufficient use of diesel reached up to ₹100 per litre.
O ₹7.5 per liter
From May 14, the state-owned OMC – Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd – increased petrol and diesel prices by approx ₹7.5 per liter. Along with this, oil prices have also come down from April highs during the Iran-US peace talks and are currently below $100 per.
But oil prices rose more than 3% on Monday as the war in West Asia escalated, with strikes by Israel in southern Lebanon and retaliatory strikes by Iran against Israel.
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Market sentiment weakened after Israel’s latest strikes on Lebanon dampened expectations of a US-Iran deal and the reopening of the Strait of Hormuz, a key global oil transit route. Iran says a ceasefire in the region would include a halt to attacks on Lebanon.
However, oil prices fell after US President Donald Trump said both Iran and Israel were seeking an “immediate ceasefire”.
By 7:10 p.m. on the Intercontinental Exchange, August Brent futures were trading at $93.89 a barrel, up 0.98%, while the July contract for West Texas Intermediate (WTI) was trading 1.07% higher at $94.06 a barrel.
Still within reach
On LPG cylinder subsidy under Pradhan Mantri Ujjwala Yojana (PMUY), Khanooja said the average consumption of cooking gas under the scheme remains in the range of four to five cylinders and the subsidy ₹1200- ₹300 for each four cylinder – will get PMUY consumers.
Earlier, PMUY consumers used to get nine cylinders per year at a subsidized rate. He did not specify when the revised subsidy support became effective.
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In a statement on Sunday, the petroleum ministry said, “Ujjwala households will receive ₹300 per cylinder on the first four refills every year — ₹1,200 per beneficiary per year; and even a household without a PMUY will still pay o ₹700 below the market price of LPG.”
On Sunday, OMC increased domestic LPG cylinder prices by ₹29. This was the second sortie since the beginning of the war in West Asia on 28 February. This comes after LPG consumption in India fell to 2.13 million tonnes in May, the lowest since the covid pandemic, and almost three months after oil companies raised LPG prices by ₹60 roll on March 7th.
After the latest revision, a domestic LPG cylinder weighing 14.2 kg will now cost ₹942 in Delhi, ₹941.50 in Mumbai and ₹968 in Calcutta.
