FuelPrices – Rising Crude Costs May Lead to Further Fuel Price Revision
FuelPrices – India could witness another increase in fuel prices if international crude oil rates remain high and the financial burden on domestic oil companies continues to grow, according to HSBC Chief India Economist Pranjul Bhandari.
Speaking in an interview on Tuesday, Bhandari said the cost at which India has been importing crude oil has remained significantly elevated in recent weeks. She noted that the current import expenses are creating substantial pressure on state-run oil marketing companies, which are already dealing with heavy financial challenges.
Pressure on Oil Marketing Companies
Bhandari explained that the effective cost of crude oil reaching India has recently hovered around $110 per barrel. At such levels, fuel retailers are reportedly facing considerable losses while selling petroleum products in the domestic market.
She pointed out that the central government has already stepped in to ease some of the burden by reducing excise duties on fuel. However, she suggested that government support alone may not be sufficient to offset the impact of expensive crude imports.
According to her assessment, consumers may also need to absorb part of the cost burden through higher retail fuel prices. She observed that fuel prices have already been revised upward by around ₹7.5 per litre, but indicated that a slightly larger increase could have helped distribute the impact more evenly.
Possibility of Additional Fuel Price Hikes
Bhandari stated that a stronger price adjustment in the range of ₹10 to ₹12 per litre would have created a more balanced sharing of costs between the government and consumers. Such a move, she said, could have reduced the financial strain resulting from the sharp rise in global energy prices.
While she did not predict an immediate revision, she suggested that further increases cannot be ruled out if international oil markets remain volatile and India’s crude import expenses stay elevated.
Her remarks come as global energy markets continue to experience uncertainty, with crude oil prices fluctuating due to geopolitical and economic factors. These developments have increased concerns for countries like India that rely heavily on imported energy supplies.
Government Highlights Financial Impact
The discussion around fuel pricing has intensified after government officials recently highlighted the financial challenges being faced by oil marketing companies.
Earlier this week, officials from the Ministry of Petroleum and Natural Gas said that public sector oil companies continue to incur significant daily losses. These under-recoveries include losses linked to the sale of liquefied petroleum gas (LPG), which remains an important household fuel across the country.
Daily Losses Remain Substantial
During a media briefing in New Delhi, Additional Secretary Praveen Khanooja stated that oil marketing companies are currently facing daily under-recoveries estimated between ₹600 crore and ₹700 crore.
Officials attributed these losses primarily to the difference between international fuel procurement costs and the prices at which petroleum products are sold domestically. As global crude prices remain elevated, maintaining stable retail fuel prices has become increasingly difficult for oil companies.
Industry experts believe that future pricing decisions will largely depend on global crude trends, government policy measures, and the financial health of domestic fuel retailers. For now, consumers and businesses alike are closely watching developments in international energy markets that could influence fuel costs in the coming months.