How India's Oil Companies Managed to Keep Fuel Prices Steady Amid Global Crises

In the face of unprecedented global energy tensions, India's state-run oil marketing companies have incurred massive losses while keeping fuel prices stable. Despite a surge in input costs and panic buying, firms like IOC, BPCL, and HPCL have maintained uninterrupted supplies without raising retail prices. This article explores the financial implications of their decisions, government interventions, and how India's approach contrasts with other countries experiencing sharp fuel price increases. Learn more about the challenges and strategies employed by these companies during this crisis.

By Narendra Chaudhary May 8, 2026, 15:52 IST

Unprecedented Losses Amid Global Tensions

New Delhi: Since mid-March, India's state-owned oil marketing firms have faced staggering losses estimated at Rs 30,000 crore. This financial strain arose as they continued to supply fuel and LPG without increasing retail prices, despite a significant energy crisis that surpassed previous disruptions.

Indian Oil Corporation Ltd (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) have ensured a steady supply of petrol, diesel, LPG, and aviation fuel since the onset of the conflict in West Asia, all while input costs surged by over 50%.

The companies' supply chains were pushed to their limits due to panic buying, which led to a sharp increase in demand after the war affected traffic through the Strait of Hormuz, a crucial route for India's energy imports. Remarkably, they managed to avoid both supply shortages and price hikes.

As a result, these three firms collectively incurred an estimated Rs 30,000 crore in under-recoveries, which is the difference between their input costs and the retail prices they charged, according to sources familiar with the situation.

Had the government not intervened by reducing excise duties on petrol and diesel by Rs 10 per litre, these losses could have escalated to nearly Rs 62,500 crore.

Before the escalation of tensions, Brent crude oil was priced around USD 72 per barrel. However, following military actions by the United States and Israel against Iran on February 28, prices surged dramatically as the conflict intensified, leading to increased shipping risks in the Strait of Hormuz.

At the height of the crisis, Brent crude prices briefly soared to nearly USD 144 per barrel as Iran retaliated, effectively halting parts of global oil transit and increasing market volatility.

Government measures included reductions in excise duties and absorbing part of the fuel cost burden. The Centre's effective absorption at peak crude prices was estimated at around Rs 24 per litre for petrol and Rs 30 per litre for diesel.

The special additional excise duty on petrol was slashed from Rs 13 to Rs 3 per litre, while diesel's excise duty was eliminated entirely.

Despite the global surge in crude prices, retail fuel prices in India have remained stable since February 28.

In April, daily under-recoveries were estimated at Rs 18 per litre for petrol and Rs 25 per litre for diesel, resulting in average daily losses of Rs 600-700 crore for the oil marketing companies.

These firms also faced additional costs due to emergency crude sourcing, increased freight charges from vessel diversions, higher marine insurance premiums, and refinery optimization expenses. Nevertheless, fuel and LPG supplies continued uninterrupted across the nation.

The rise in crude prices and the decision to shield consumers from price hikes have put considerable pressure on the balance sheets of these companies and their refining margins.

Sources indicated that these actions reflect a policy choice to prioritize consumer stability and economic continuity during a global energy crisis.

However, prolonged high crude prices could necessitate increased working capital borrowings and adjustments to capital expenditure plans. Investments related to refining expansion, energy security, ethanol blending, biofuels, and transition fuels are expected to continue with government support.

India's strategy stands in stark contrast to that of many other nations, where fuel prices surged sharply following the energy crisis.

For instance, petrol prices rose by approximately 34% in Spain, 30% in Japan, Italy, and Israel, 27% in Germany, and 22% in the United Kingdom. Many countries also implemented rationing, conservation advisories, emergency relief packages, or fuel caps.