Crude Rises to $95: How Long Can OMCs Absorb Fuel Price Pressures?
The price of Brent crude has risen to $95 a barrel, but state-run oil companies (OMCs) are unlikely to raise fuel prices unless crude stays above $100 for several weeks.
According to sources, OMCs can broadly absorb crude at $85-$90 a barrel and are currently operating close to break-even on auto fuels. However, a sustained rise in crude prices above $95-$100 a barrel could force the government and OMCs to reconsider retail fuel prices.
Brent crude has gained more than $4 over the previous two days as the US and Iran stepped up military strikes. India's crude basket had averaged $90.19 a barrel in August, according to data from the Petroleum Planning and Analysis Cell (PPAC).
OMCs had raised petrol and diesel prices by around ₹7.5 a litre in May, their first increase in four years, when the Indian crude basket had reached $106.23 a barrel amid the Iran war.
The cumulative losses of OMCs on domestic LPG sales had crossed ₹59,000 crore as of July 31, despite government compensation of ₹52,000 crore disbursed until FY27.