India is the world’s third-largest consumer of crude oil and depends on imports to meet over 88% of its requirements. (File Photo)With the jump in crude oil and petroleum product prices globally amid fresh flare-ups in the ongoing West Asia conflict, public sector fuel retailers are currently estimated to be losing about Rs 5 per litre on retail petrol sales and over Rs 20 on diesel sales, according to industry analysts and experts. On Wednesday, international crude benchmark Brent topped $100 per barrel, the highest in about one-and-a-half months after recent escalation in attacks in West Asia.India is the world’s third-largest consumer of crude oil and depends on imports to meet over 88% of its requirements. Amid the West Asia conflict, which has been on for over six months now, public sector oil marketing companies (OMCs) — Indian Oil, Bharat Petroleum, and Hindustan Petroleum — only partially passed on to retail consumers the international price increase in fuels like petrol, diesel, and liquefied petroleum gas (LPG), resulting in heavy losses to the companies.After narrowing over the past two-three months, the losses are now widening again amid the recent spurt in global prices, increasing pressure on the OMC finances. The three companies collectively reported a net loss of over Rs 18,000 crore for the April-June quarter. For over three months now, retail petrol and diesel prices haven’t changed. Prices were last revised in May by a total of Rs 7.35 per litre for petrol and Rs 7.53 per litre for diesel in four rounds. Despite these hikes, the OMCs continued to incur losses on retail fuel sales.Also Read | ‘High crude prices spook foreign players’: Nifty, Sensex hit 3-month low“With escalation in hostilities between Iran and the US, Brent prices have crossed the $100/barrel mark today and the Indian crude basket is at around $109/barrel. At the average price for the month of September till date, marketing margins on petrol are negative Rs 5/litre and diesel at negative Rs 23/litre, and under recoveries on domestic LPG are at Rs. 200/cylinder,”said Prashant Vasisht, senior vice president and co-group head, corporate ratings at ICRA.“If the current geo-political situation persists, crude oil prices could rise further given that several countries including China were tapping their strategic reserves for a significant proportion of their consumption and their return to the market could increase demand in a period of restricted supplies,” he added.Energy imports are a major component of India’s overall imports, and any meaningful increase has ramifications for the country’s trade balance, current account, inflation, and the rupee’s exchange rate, among others.Given its high oil consumption and import dependency, India is already bearing the brunt of high oil prices. The country imports 1.8-2 billion barrels of oil a year, and every $1-per-barrel increase in price bumps up its oil import bill by up to $2 billion on an annualised basis. According to a March report by Nomura, India is among the three Asian economies most vulnerable to high oil prices, the other two being Thailand and South Korea.Story continues below this adIt also said that every 10% oil price increase typically widens India’s current account deficit by 0.4% of the GDP. Crude oil alone is the country’s largest merchandise import. According to Commerce Ministry data, crude oil imports in 2025-26 stood at about $135 billion. If oil prices sustain at $100 per barrel in the current financial year and import volumes don’t decline, the oil import bill could be upwards of $200 billion for the year. If the price sustains at a much higher level, the implications would be even graver.Also Read | How US share in India’s LPG imports surged to over 50% in 6 monthsAmid the West Asia conflict, India’s crude oil import bill surged by over 56% on a year-on-year (y-o-y) basis in April-July to $63.4 billion, even as import volumes rose slightly to 81.9 million tonnes — or about 600 million barrels — from 81.5 million tonnes, as per data from the Petroleum Planning and Analysis Cell (PPAC).“The US carried out additional strikes on Iranian oil tankers near Kharg Island, hitting 5 vessels in response to Iran attempting to strike a US Navy warship. This resulted in Iran firing ballistic missiles towards Jordan, while also warning vessels in the Persian Gulf could be targeted. Recent developments only reinforce the view that we’re still some way from a restart in talks. In the meantime, the market is likely to continue to price in a sizeable risk premium,” ING’s commodities strategists Warren Patterson and Ewa Manthey said in a note on Wednesday. Last week, Morgan Stanley commodities strategist Martijn Rats forecast that Brent would average $100 per barrel in the October-December quarter.Sukalp Sharma is a Deputy Associate Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 16 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. He considers himself an above-average photographer, which goes well with his love for travel. ... Read More