A report by ICICI Securities stated that successive increases in petrol and diesel prices in India have helped reduce losses incurred by oil marketing companies (OMCs). However, financial pressures remain due to rising LPG under-recoveries and continued volatility in global oil prices.
According to the report, petrol and diesel prices have increased by approximately ₹7.5 per litre since May 15, 2026, including the latest hike of ₹2.6–2.7 per litre announced on May 25.
The report noted that these increases were necessary after marketing margins deteriorated significantly as a result of rising international crude oil and refined product prices. Estimates show that retail margins for petrol and diesel shifted from profits of ₹7.8 and ₹2.9 per litre, respectively, during the third quarter of fiscal year 2026, to losses of ₹17 and ₹20 per litre in April 2026.
ICICI Securities estimated that, without the recent fuel price hikes, oil marketing companies would have incurred losses of nearly ₹421 billion during the first quarter of fiscal year 2027.
Despite the recent increases, losses remain substantial. The report indicated that petrol prices would need to rise by an additional ₹6.6 per litre and diesel prices by ₹9.7 per litre to reach break-even levels. A further increase of ₹3.5–4 per litre may also be required to restore normal marketing margins.
Regarding liquefied petroleum gas (LPG), the report warned of a sharp rise in under-recoveries, with estimated losses exceeding ₹650 per cylinder in May 2026, compared with around ₹170 in April and ₹100–120 during the final quarter of the previous fiscal year.
The report projected that industry-wide LPG losses could approach ₹300 billion in a single quarter if no further price increases are implemented, driven primarily by a sharp increase in Asian propane and butane prices.
It also stressed that the financial position of Indian oil companies will remain vulnerable during the first half of fiscal year 2027 unless fuel prices continue to rise or global crude oil prices decline significantly following any easing of tensions between the United States and Iran that are affecting shipping through the Strait of Hormuz.
The report noted that crude oil prices had already fallen by 5–6 percent on May 25 amid reports of a possible easing of tensions between Washington and Tehran. Nevertheless, it cautioned that geopolitical uncertainty remains high and energy market volatility could continue.
ICICI Securities maintained a positive outlook on India’s major oil marketing companies, recommending a Buy rating for Indian Oil Corporation and Bharat Petroleum Corporation, while retaining an Add rating for Hindustan Petroleum Corporation.
The report also warned that continued fuel price increases could contribute to broader inflationary pressures through higher transportation and logistics costs, potentially affecting the overall Indian economy.
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