The Indian fuel market is sitting on a ticking time bomb as state-owned oil marketing companies (OMCs) continue to bleed due to soaring global crude prices. Despite crude oil breaching the $120 per barrel mark following US-Israeli strikes on Iran and supply jitters, retail prices in India have remained frozen since April 2022.

Recent data suggests that Indian Oil, BPCL, and HPCL are currently incurring staggering losses of ₹18 per litre on petrol and ₹35 per litre on diesel. While the central government recently slashed excise duty by ₹10 per litre, the benefit was diverted to offset part of the OMCs’ daily losses, which had peaked at ₹2,400 crore. Currently, the companies are losing approximately ₹1,600 crore every single day.

A report by Macquarie Group indicates that this price stability is unlikely to last long. With critical assembly elections in states like West Bengal and Tamil Nadu concluding this month, a sharp upward revision in pump prices is highly probable. As India prepares to import 88% of its crude needs by 2025, any further $10 increase in barrel prices could widen the current account deficit by 30 basis points. For now, the “price freeze” remains a pre-election cushion, but a major fiscal correction looms just beyond the ballot box.