India's state-owned oil marketing companies (OMCs) are weighing a modest fuel price increase, with processors expecting a hike of around ₹5 per litre on both petrol and diesel, according to a report. The move is driven by mounting losses on fuel sales, estimated at ₹10 billion ($105 million) a day.

OMCs, which include Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum, sell petrol and diesel at retail prices set or influenced by the government. When global crude oil prices rise faster than domestic retail prices are adjusted, the companies absorb the gap, booking what are known as under-recoveries or marketing losses.

Why Losses Are Mounting

At ₹10 billion a day, the cumulative loss builds quickly. A sustained gap between international crude costs and domestic pump prices puts pressure on OMC balance sheets, squeezes cash flows, and can eventually affect their ability to invest in refining and distribution infrastructure. A ₹5-per-litre hike would partially close that gap, though whether it fully covers current losses depends on where crude prices sit at the time of any revision.

Fuel price changes in India have historically been sensitive territory. The government has at times directed OMCs to hold prices steady ahead of state elections, absorbing losses on the companies' books. Any hike, even a modest one, directly raises transport and logistics costs, which feed through to the broader economy via higher freight rates and input costs for businesses.

What to Watch

No official announcement has been made. The ₹5-per-litre figure is a market estimate, not a confirmed government or OMC decision. The timing of any revision will likely depend on the political calendar, crude oil price direction, and how long OMCs and the government are willing to sustain current loss levels. Investors in OMC stocks will watch for any signal from the petroleum ministry or a formal price notification, either of which would move refining and marketing margins meaningfully.