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New Delhi: Due to rising tensions in West Asia, the price of crude oil rose again today. Brent crude is trading at $111.5 a barrel, up more than 2 per cent. Since the start of the Iran war, crude oil has become more expensive by 50 per cent. This has created havoc all over the world. This is a big problem for India as we import about 90% of our crude oil. Government oil companies are losing about Rs 1,380 crore daily due to high oil prices.
The government had recently hiked the price of petrol and diesel by Rs 3 per litre, but analysts say at least a Rs 25 hike is needed to offset the losses incurred by state-owned oil companies. According to the calculation made by Nomura’s analyst, government companies are losing Rs 1,380 crore daily on petrol, diesel, and LPG.
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The brokerage firm estimates that if this continues, Indian Oil Corporation’s balance sheet equity will be depleted in 10 years, Bharat Petroleum in 4 years and Hindustan Petroleum in 2 years. The worst situation is that of HPCL. The company is losing $19 per barrel on an integrated basis. Similarly, IOCL is losing $4 per barrel and BPCL is losing $8 per barrel. Before the Iran war, these companies were making a profit of 12 to 14 dollars per barrel.
According to Elara Capital, an increase in the price of petrol and diesel by Rs 3 per liter will reduce the annual losses of oil companies by Rs 34,500 crore. If crude oil does not come down, then retail prices will have to increase or additional fiscal support will be needed. Nomura believes that the recent rise is likely to lead to further gains.
After the Iran war, the price of crude oil has increased by 50 percent and the oil companies recently increased the price of petrol-diesel after four years. But this increase cannot compensate for their loss as they are losing Rs 1,380 crore daily.
Along with petrol-diesel as well as LPG, oil companies are suffering huge losses. In a recent analyst call, HPCL said that it is incurring a loss of Rs 670 per cylinder. MK estimates that companies are losing Rs 200 to 400 crore daily on LPG. Similarly, companies are suffering losses in ATF, i.e. aviation fuel. It is worth noting that there has been no change in ATF rates for domestic scheduled airlines since April.
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