Who made money during low crude years? Deepak Shenoy puts oil firms under lens

India’s oil and gas sector has come under sharp focus as rising geopolitical tensions in West Asia trigger fresh concerns over crude oil prices, inflation, and fuel costs. Amid the debate, Capitalmind Founder and CEO Deepak Shenoy questioned whether Indian consumers truly benefited during the years when global crude prices remained relatively subdued.

In a post on X, Shenoy said the last three years of lower crude prices did not significantly help Indian consumers because petrol prices largely remained elevated. “Who made money? The government and the oil companies,” he said, adding that India’s largest fuel retailer has reported collective profits of more than Rs 82,000 crore from FY24 till now.

“They should take the hit now,” Shenoy remarked, suggesting that oil marketing companies and the government should absorb some pressure instead of passing on the full burden of rising crude prices to consumers.

The comments come at a time when Brent crude prices are witnessing heightened volatility due to escalating tensions in West Asia, a region critical to global oil supply. India, which imports more than 85% of its crude oil requirement, remains highly vulnerable to any sustained spike in global oil prices.

A rise in crude prices has a direct impact on India’s import bill and foreign exchange outflows. Higher oil prices typically widen the current account deficit, weaken the rupee, and increase inflationary pressure across industries, particularly transportation, logistics, aviation, paints, chemicals, plastics, and manufacturing.

The government has already started taking a cautious approach toward fuel consumption. Prime Minister Narendra Modi recently appealed to citizens to avoid unnecessary fuel usage amid the uncertain geopolitical environment. Alongside this, the Oil Ministry’s advisory has encouraged measures such as increased use of public transport, work-from-home arrangements, and controlled fuel consumption to help reduce pressure on foreign exchange reserves.

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Sharp earnings in the past

In his post, Shenoy also shared financial data of Indian Oil Corporation Ltd. (IOCL), India’s largest oil retailer, highlighting the sharp earnings surge seen during recent years of elevated fuel prices and strong refining margins. The company reported a net profit of Rs 43,161 crore in FY24, sharply higher than Rs 11,704 crore in FY23. Even in FY25, despite moderation in profitability, net profit stood at Rs 13,789 crore, while trailing twelve-month (TTM) profit remains strong at nearly Rs 36,869 crore.

Operating profit trends also reflected substantial improvement. IOCL’s operating profit rose to Rs 75,650 crore in FY24 compared to Rs 30,683 crore in FY23. The numbers indicate that despite global crude volatility and geopolitical uncertainty, oil marketing companies continued to maintain healthy profitability, intensifying the debate over whether consumers received adequate benefits during periods of lower crude oil prices.

Crude oil and markets

Market experts note that the relationship between crude oil prices and equity markets often behaves like a see-saw. When crude prices rise sharply, sectors dependent on petroleum-linked raw materials usually face pressure on margins and profitability. Industries such as aviation, tyre manufacturing, paints, cement, and logistics tend to be among the worst affected.
At the same time, upstream oil producers and refining companies can benefit from higher crude-linked realizations, depending on government intervention and pricing controls. Investors are therefore closely monitoring whether the government may ask oil marketing companies to absorb some of the increase in fuel costs to protect consumers from inflation.

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The debate has also revived broader questions around fuel taxation and pricing transparency in India. During periods of low crude prices globally, retail fuel prices in India did not fall proportionately because excise duties and taxes remained elevated. Now, with crude prices moving upward again, concerns are growing over whether consumers may once again bear the brunt of rising energy costs.