New Delhi: Indian oil marketing companies are facing a double blow due to a sharp surge in crude oil prices, triggered by the conflict in West Asia, along with the depreciation of the rupee against the US dollar. The price of the Indian crude basket averaged $69.01 per barrel in February 2026, but has now jumped to $117.09 per barrel in March. Global Brent crude is also hovering around $112.19 per barrel, marking nearly a 60 percent increase since the end of February. Meanwhile, the Indian rupee has weakened to 93.22 against the dollar (as of March 23), compared to 91.07 on February 28.

As per reports, oil companies estimate that for every one-dollar increase in crude oil prices, they incur an additional burden of up to ₹16,000 crore. In the current situation, a hike in retail prices of regular petrol and diesel appears unlikely; however, oil companies have raised the prices of premium petrol by ₹2 per litre and bulk diesel by ₹22 per litre, indicating mounting pressure on their finances.

The combined impact of expensive crude oil and a weakening rupee between February and March is expected to significantly affect the profit margins of oil marketing companies. Officials in the oil industry said that between August 2025 and February 2026, crude oil prices ranged between $62 and $69 per barrel, during which companies earned margins of about ₹5–10 per litre on petrol and ₹8–15 per litre on diesel (difference between selling price and total cost, including taxes). However, transportation and other operational costs have now risen sharply, leading to estimated under-recoveries of around ₹20 per litre on petrol and up to ₹40 per litre on diesel.

Notably, since February 2022, Indian Oil, Hindustan Petroleum, and Bharat Petroleum have not increased retail prices of petrol and diesel. In Delhi, petrol continues to be sold at ₹94.77 per litre and diesel at ₹87.67 per litre.

In addition, war-risk premiums, freight charges, and insurance costs have also increased. While stable retail prices are providing relief to consumers, oil marketing companies are bearing the financial strain.

HPCL May Slip into Losses if Brent Stays Above $100

Brokerage firms have also raised concerns over the financial health of oil marketing companies. Reports by Ambit and UBS suggest that if Brent crude remains above $100 per barrel, HPCL may slip into losses in the third quarter of FY 2025–26, while profits of Indian Oil and Bharat Petroleum could fall by up to 50 percent.

Experts warn that prolonged under-recoveries could reduce cash flows, increase debt levels, and may eventually force the government to provide subsidies or cut excise duties. However, the government has clarified that no immediate burden of fuel price hikes will be passed on to consumers for now. DeshGujarat