The government informed the Lok Sabha on Thursday that state-run oil marketing companies are still under a lot of pressure due to high crude oil prices and LPG under-recoveries amid continuous geopolitical concerns in West Asia.
Brent oil prices "continue to heavily fluctuate and have increased again," Minister of State for Petroleum and Natural Gas Suresh Gopi said in a written reply. The crisis in West Asia "has not abated and the resultant geopolitical situation is highly volatile."
According to the minister, OMCs in the public sector "have incurred huge losses on the sale of petrol, diesel and LPG."
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The government claims that as of June 30, 2026, PSU OMCs' total under-recovery on domestic LPG was above Rs 51,000 crore. Additionally, it stated that in July, non-Ujjwala clients received an implied subsidy of more than Rs 500 for each 14.2-kg LPG cylinder.
Fears of new supply interruptions and a further escalation of hostilities in the Middle East were raised after Iran-backed Houthis claimed to have attacked two Saudi Arabian tankers in the Red Sea, pushing oil prices closer to $100 per barrel.
Following a brief spike above $98 per barrel, Brent crude extended its gains from the previous session, when it closed at a six-week high. The Houthis claimed to have violated an earlier-announced blockade of Saudi ports by using drones and missiles to target the ships.
Following increased tensions between the US and Iran, shipping via the Strait of Hormuz has already been hampered by the most recent attack, which creates a new front in the regional battle. As shipments from the Persian Gulf drastically decreased, Saudi exports across the Red Sea emerged as a crucial substitute.
Due to growing geopolitical uncertainties, crude prices have already increased by more than 30% this month.
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