Today, due to increasing tension in West Asia, crude oil prices have increased once again. Brent crude is currently trading at $111.5 per barrel, which represents an increase of more than 2 percent. Since the beginning of the conflict involving Iran, crude oil prices have increased by 50 percent. This situation has caused great upheaval throughout the world. This is a big challenge for India, because we import about 90 percent of our crude oil needs. Due to rising oil prices, government oil companies are incurring a loss of around ₹1,380 crore every day.
The government recently increased petrol and diesel prices by ₹3 per litre; However, analysts believe that an increase of at least ₹25 per liter is necessary to fully compensate the losses incurred by these state oil companies. According to estimates made by Nomura analyst Vineet Banka, government companies are incurring a daily loss of ₹1,380 crore in the three segments of petrol, diesel and LPG combined.
damage limitation
The brokerage firm estimates that if this trend continues, Indian Oil Corporation could see equity wiped off its balance sheet within 10 years, followed by Bharat Petroleum within 4 years, and Hindustan Petroleum within just 2 years. HPCL is facing the most serious situation as the company is currently incurring a loss of $19 per barrel on an integrated basis. Similarly, IOCL is incurring a loss of $4 per barrel, while BPCL is incurring a loss of $8 per barrel. Before the Iran conflict, these companies were making profits of $12 to $14 per barrel.
According to Elara Capital, the recent increase in petrol and diesel prices by ₹3 per liter will reduce the annual loss of oil companies by ₹34,500 crore. If crude oil prices do not decline, retail fuel prices will either have to increase further, or additional financial support from the government will be required. Nomura believes that even after the recent rise, further price increases could happen soon. The firm says that a similar situation was seen after the Ukraine conflict.
oil game
After the Iran conflict, crude oil prices have increased by 50 percent.
After a gap of four years, oil companies recently increased the prices of petrol and diesel.
However, this increase in prices is not enough to compensate for their losses.
Oil companies are currently incurring a daily loss of ₹1,380 crore.
Loss on LPG
Apart from petrol and diesel, oil companies are also incurring huge losses on LPG. During a recent analyst call, HPCL reported that it was incurring a loss of ₹670 on every LPG cylinder sold. MK estimates that oil companies are collectively incurring a daily loss of ₹200 to ₹400 crore on LPG. Similarly, companies are also incurring losses on ATF—ie aviation fuel. The rates of ATF supplied to domestic scheduled airlines have not changed since April.
