Fuel Crisis: Govt Says Petrol Prices Could Have Been Higher, OMCs Losing Rs 550 Crore Daily

As oil prices surge amid the West Asia conflict, the govt says India has managed to avoid a deeper fuel crisis by asking public sector oil companies to absorb losses of nearly Rs 550 crore every day.

Officials maintain there is no fuel shortage in the country, even as authorities crack down on panic buying, diversion and black marketing.

Source : ABPLIVE AI

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Key points generated by AI, verified by newsroom

• Public sector oil companies absorb daily losses of Rs 550 crore.
• Retail consumers protected from global fuel price increases.
• Industrial fuel purchases are linked to international market rates.

As fuel prices remain under pressure amid the ongoing West Asia crisis, the Centre has said public sector oil companies are continuing to absorb significant losses to shield ordinary consumers from the full impact of soaring global energy prices.

According to the Ministry of Petroleum and Natural Gas, state-run oil marketing companies (OMCs) are currently absorbing losses of nearly Rs 550 crore every day on the sale of petrol, diesel and LPG after refraining from fully passing on international price increases to domestic consumers.

The government said the support mechanism is specifically intended to protect retail consumers, including households, two-wheeler users and farmers purchasing fuel at petrol pumps.

Govt Draws Line Between Retail and Industrial Fuel Buyers

While retail consumers continue to receive a pricing cushion, the ministry clarified that industrial procurement operates under a different framework where prices are linked to international market rates as part of standard policy.

The government warned that some industrial consumers were shifting purchases away from industrial supply channels towards retail pumps to take advantage of lower subsidised retail pricing.

According to the ministry, this diversion creates unnecessary pressure at fuel stations and can trigger localised shortages even when overall supplies remain adequate.

“It is not extended to industrial procurement, where pricing tracks international actuals as a matter of standing policy,” the ministry said in its statement.

Private Fuel Retailers Losing Customers

The statement also pointed to a sharp fall in diesel sales at private oil marketing companies due to comparatively higher pricing.

According to the ministry, private fuel retailers have witnessed a decline of around 38 per cent in diesel offtake this month across both retail outlets and bulk buyers.

Officials said a significant portion of this demand has shifted towards public sector retail outlets where prices remain relatively lower.

At the same time, PSU oil companies have also seen bulk customer volumes decline by nearly 29 per cent as more buyers increasingly move towards retail pumps.

Govt Warns Against Hoarding and Diversion

Taking a serious view of the situation, the Centre said it has reached out to industry associations and urged them to sensitise members about the consequences of fuel diversion and misuse.

The government has also requested states and Union Territories to form special squads to monitor and act against black marketing, unauthorised stocking and diversion of petroleum products.

The ministry said strict action can be taken under provisions of the Essential Commodities Act and related control orders.

‘No Fuel Supply Issue In India’

Despite reports of panic buying and concerns over shortages in some regions, the government maintained that India has more than adequate fuel supplies to meet both retail and industrial demand.

The ministry highlighted India’s refining strength, noting that the country is the world’s fourth-largest refiner with an installed capacity of 258.1 million tonnes per annum spread across 22 operational refineries.

Domestic fuel consumption stood at 243.2 million tonnes during FY26, while petroleum product exports touched 61.5 million tonnes during the same period.

According to the ministry, these figures underline India’s position as one of the world’s largest exporters of refined petroleum products.

“There is no supply issue of any kind,” the statement emphasised.

Energy Security Takes Centre Stage

The government said India’s energy security framework continues to remain operational despite global disruptions linked to the West Asia conflict.

The ministry credited coordinated efforts between the Centre, states, public sector oil companies and industry stakeholders for ensuring uninterrupted fuel availability across the country.

It also appealed to citizens to avoid panic buying and rely only on official communication.

“Citizens are requested to rely on official communication and to disregard rumours that mistake an arbitrage problem for a supply problem,” the ministry said.