Oil prices: OMCs want to increase petrol, diesel, LPG prices but govt isn’t keen

Oil prices today: State-run oil marketing companies (OMCs) are reportedly pressing for higher energy prices after crude oil crossed $126 a barrel on Thursday. However, government officials have stated there is no plan to increase petrol and diesel rates at this time.

According to a report in The Economic Times, the rise in crude and refined product prices has increased losses for state-run fuel retailers, who are already affected by the Gulf war. The government is hesitant to absorb these losses as LPG and fertiliser subsidies are already high, the report added. Raising retail fuel prices could lead to inflation and impact economic growth.

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OMCs are incurring losses on petrol, diesel, aviation turbine fuel, and LPG and are seeking approval to raise retail prices. They argue that sustained losses are not viable and may request government compensation if prices are not increased, the report stated citing sources. Initially, OMCs absorbed losses due to previous profits, but with no end to the Gulf crisis in sight, a price hike may be necessary, it said.

Domestically, OMCs have selectively increased prices for premium petrol, bulk diesel, and ATF for international flights. Regular petrol and diesel prices remain unchanged, ATF for domestic flights has been partially raised, and LPG prices have increased by only ₹50 per cylinder.

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Despite these pressures, the government has ruled out an immediate increase in petrol and diesel prices. Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas, had earlier stated there is no proposal to raise prices and urged the public not to believe rumours that have caused panic buying in some areas.

Sharma assured that the country has sufficient stocks of petrol, diesel, LPG, and ATF to meet demand. She said supplies are being prioritised and monitored to prevent shortages at retail outlets.

Retail petrol and diesel prices have remained unchanged for nearly four years, even as crude oil costs have risen by over 50% in the past two months. Estimates suggest daily losses for state-run fuel retailers could be around Rs 2,400 crore. Sharma noted losses of about Rs 20 per litre on petrol and Rs 100 per litre on diesel due to frozen pump prices.

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Crude prices surged after US President Donald Trump indicated an extended naval blockade of Iran, raising concerns over supply disruptions in the Strait of Hormuz. This followed the attack by the US and Israel on Iran, which led to the effective closure of this key energy route.

In global markets, average diesel and petrol prices in April were 119% and 69% higher than in February. LPG prices increased by over 40%, and aviation turbine fuel prices doubled. Brent crude for June delivery rose above $126 a barrel, while July futures traded around $114. Before the conflict began on February 28, Brent was about $73 per barrel.