Despite the rising prices of crude oil in the international market, due to lack of increase in retail rates, companies are incurring losses on every liter of petrol and diesel. According to rating agency ICRA, oil companies are facing a loss of ₹ 14 per liter on petrol and ₹ 18 per liter on diesel. Due to the ongoing tension in the Middle East, the supply chain has been affected, due to which the prices of crude oil have increased rapidly. Due to this the burden on oil companies is increasing. Not only this, the burden on the government for LPG is also increasing by ₹ 80,000 crore. Crude oil crosses $120 due to rising tensions in the Middle East. Crude oil supply chain has collapsed due to rising tensions in the Middle East. The price of crude oil, which was available at $70-72 per barrel some time ago, has now crossed $120-125. The problem for oil companies is that they are buying expensive oil and selling it at old prices, due to which their profits have been wiped out. Indian basket becomes costlier by $ 42 in 61 days. Impact of tension on Hormuz route. About 20% of the world’s oil and gas (LNG) trade takes place through the sea route of ‘Strait of Hormuz’. This path is being hindered due to the Middle East crisis. Due to this, not only petrol and diesel but also the cost of fertilizer and chemical manufacturing companies has increased. Cooking gas and fertilizers have also become expensive. The impact of this crisis is also reaching your kitchen and farms: In simple language, when companies have to spend ₹ 100 in making or buying something, but due to government or market pressure they have to sell it for ₹ 80 only, then the loss of the remaining ₹ 20 is called ‘under-recovery’. This is what is happening right now in the case of petrol, diesel and gas. There is a possibility of decline in the margins of CNG used in vehicles in cities, because the companies are not able to pass the entire burden of the increased cost on to the customers. ICRA has described the future of chemical, plastic and fertilizer sectors as ‘negative’. Experts believe that until the ongoing wars and tensions in the world do not subside, these sectors will remain under pressure.
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Oil companies are selling petrol at a loss of ₹ 14: ₹ 18 loss on diesel, ₹ 80,000 crore burden on LPG due to costlier crude oil.
