As the Iran War continues to jitter global energy markets, leading to elevated crude prices, Indian oil marketing companies have announced yet another fuel price hike of around 90 paise per litre on Saturday morning, marking the third increase in just nine days, while taking the cumulative price hike across petrol and diesel to Rs 4.8 per litre.
This comes against the backdrop of a Rs 3 per litre hike on May 15 and a 90 paise per litre hike on May 19, as oil marketing companies Hindustan Petroleum (HPCL), Bharat Petroleum (BPCL) and Indian Oil Corp. (IOC) continue to try to offset mounting losses they have incurred due to elevated crude prices.
Why The Repeated Hikes?
The three successive price hikes come as Indian OMCs grapple with losses of around Rs 1-1.2 lakh crore in Q1FY27. This number was given by Petroleum Minister Hardeep Singh Puri earlier in the month, with the losses stemming from the ongoing West Asia conflict.
At the start of the hike cycle, the three state-run refiners were absorbing a cumulative daily loss of around Rs 1,000 crore - a figure that was always going to be unsustainable over the long run.
Impact On OMC Earnings
According to various analysts, every 50 paise per litre increase in fuel marketing margins is estimated to lift EBITDA by 7% for IOCL, 8% for BPCL and 11% for HPCL.
India's total petrol and diesel consumption stands at 463 million litres per day, comprising 308 million litres of diesel and 155 million litres of petrol. With OMCs commanding a 90% market share, around 417 million litres per day of fuel is sold through pumps operated by HPCL, BPCL and IOCL.
The first hike of Rs 3 per litre on May 15 helped OMCs cut their daily losses by 25%, bringing them down to roughly Rs 750 crore per day. The second hike of 90 paise on May 19 trimmed another 5% off the daily burn, taking losses to around Rs 710 crore per day.
With Tuesday's third hike of 90 paise, OMCs are expected to recoup an additional Rs 38 crore per day, taking the cumulative recovery from the three hikes to nearly 35% of the original daily losses.
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