Gas costs defined: Why oil corporations are nonetheless dropping ₹19 on diesel and ₹6 on petrol
State-run oil advertising and marketing corporations (OMCs) misplaced an estimated ₹18.9 on each litre of diesel and ₹6 on each litre of petrol offered in the course of the April-June quarter, in response to ICICI Securities. The losses got here regardless of home pump costs remaining largely unchanged, highlighting how gasoline pricing works and why crude oil costs alone don’t decide OMC profitability.
In keeping with the brokerage, OMCs earned margins of ₹8.2 per litre on diesel and ₹10.3 per litre on petrol within the corresponding quarter a 12 months in the past. Nonetheless, the surge in worldwide crude oil and refined gasoline costs in the course of the newest quarter was not totally mirrored in retail costs, pushing advertising and marketing margins into unfavourable territory.
How are petrol and diesel priced?
The value customers pay at gasoline stations is made up of a number of parts. On the refinery gate, petrol and diesel are valued broadly in keeping with worldwide costs of refined fuels. Oil corporations then add freight and logistics prices, advertising and marketing and distribution bills, supplier commissions and relevant taxes earlier than arriving on the ultimate pump worth.
| Part | What it consists of |
| ——————- | ——————————————- |
| Refinery worth | Linked to worldwide refined gasoline costs |
| Freight & logistics | Transportation and distribution prices |
| Supplier fee | Fee paid to gasoline station sellers |
| Taxes | Central excise obligation and state VAT |
| Retail margin | Revenue or loss earned by OMCs |
When worldwide gasoline costs rise however pump costs aren’t revised proportionately, OMCs’ retail margins shrink. Conversely, if international costs fall whereas retail costs stay unchanged, corporations earn greater margins.
Why are losses rising?
ICICI Securities attributed the most recent losses to the mismatch between rising worldwide gasoline costs and comparatively secure home pump costs throughout April-June.
Petroleum and Pure Gasoline Minister Hardeep Singh Puri lately stated OMCs incurred losses of round ₹75,000 crore in the course of the quarter by promoting petrol, diesel, liquefied petroleum fuel and aviation turbine gasoline under market charges.
How a litre of petrol or diesel is priced
| Part | What it means |
|---|---|
| Refinery worth | Primarily based on worldwide costs of refined petrol and diesel |
| Freight & logistics | Price of transporting gasoline to depots and stores |
| Advertising and marketing & distribution | Operational bills incurred by OMCs |
| Supplier fee | Fee paid to petrol pump sellers |
| Taxes | Central excise obligation and state VAT |
| Retail margin | Revenue or loss earned by OMCs after promoting gasoline |
The present losses mark a pointy reversal from the sturdy retail margins seen over the previous two monetary years. In keeping with ICICI Securities, petrol margins had peaked at ₹12 per litre within the third quarter of FY25, whereas diesel margins reached ₹8.2 per litre within the first quarter of FY26.
OMC retail margins (₹ per litre)
| Interval | Diesel | Petrol |
|---|---|---|
| April–June 2026 | -18.9 | -6.0 |
| April–June 2025 | 8.2 | 10.3 |
| June quarter FY25 | 2.5 | 4.4 |
| Peak margin (final 2 FYs) | 8.2 (Q1 FY26) | 12.0 (Q3 FY25) |
Supply: ICICI Securities
Why crude oil is not the one issue
A standard assumption is that petrol and diesel costs ought to instantly fall each time crude oil costs decline. In actuality, Indian gasoline costs are influenced not solely by crude but in addition by worldwide costs of refined petroleum merchandise.
Trade officers say OMCs benchmark petrol and diesel in opposition to international refined gasoline costs in markets corresponding to Singapore and Dubai. Freight prices, insurance coverage expenses and change fee actions are additionally factored into pricing.
The oil minister has additionally identified that gasoline offered in the present day is produced from crude bought weeks earlier, that means present retail economics usually replicate earlier procurement prices reasonably than prevailing crude costs.
Why analysts disagree
The methodology used to calculate advertising and marketing margins has led to differing estimates. Whereas ICICI Securities reported losses in the course of the April-June quarter, some analysts argue margins have since improved as Brent crude has eased to round $72-73 per barrel.
The differing assessments replicate variations in assumptions over stock prices, worldwide refined gasoline costs and the timing of crude purchases. For customers, nonetheless, the takeaway is easy: OMC profitability is dependent upon a mix of world gasoline costs, taxes, change charges and authorities selections on pump costs—not crude oil costs alone.
