Petrol diesel price hike anytime; Anylysts see rate increase possibility - Why oil companies worried and what data shows?

Petrol diesel price hike soon: Prime Minister’s appeal to citizens in order to manage the challenging external environment arising from (1) continued disruptions to global oil and gas supplies and (2) related high energy prices raises intriguing prospects about the potential action from the government. Amid these circumstances, the government may have to look at more concrete steps in the case of a prolonged conflict, Kotak Securities shared in its startegy note.

Will petrol price increase in India due to war?

Kotak said that the government may have to raise retail prices and/or absorb higher losses depending on the duration and magnitude of the conflict and high oil prices. The high monthly losses of the downstream oil companies on the back of large under-recoveries on diesel and gasoline have already cramped their ability to absorb additional losses.

Another brokerage Antique sees that petrol and diesel price hikes are inevitable. The insights were shared after meeting with officials.

Officials suggested that availability of energy supplies is not a constraint, however prices may remain elevated at least till September given damages in energy infrastructure and production curtailment in key production regions may take time to normalise, Antique shared.

Are we in for a hike in petroleum prices for consumers?

Antique shared that officials refrained from providing any indication. However, "we believe that government may only take a moderate price hike in petroleum products (depending upon the duration of West Asia conflict and crude oil prices) as

a) Our estimate suggest that annual impact of excise duty cut of INR 10/ liter in petrol and diesel net of export tax may cost the exchequer INR ~1tn annually (or 0.26% of GDP);

b) Government has already created a INR 1 trillion Economic stabilization Fund (ESF), funded through second batch of supplementary demands for grants for FY26 (INR 574 bn) and through internal funding (like unspent fund from various ministries);

c) OMC break-even integrated EBITDA margin (marketing and refining combined) is INR 91/ ltr; and

d) Every 10% increase in crude oil prices (if passed through to consumers) lead to 50bps higher inflation and 15bps lower growth (as per RBI estimates)."