Country The first quarter of the current financial year has been very bad for all the Oil Marketing Companies (OMCs). In the April-June quarter, oil marketing companies suffered a loss of Rs 18.9 on every liter of diesel sold at retail and Rs 6 on every liter of petrol. According to brokerage firm ICICI Securities, the prices of petrol and diesel in the country remained low compared to the international oil prices.
Last year oil companies had made bumper earnings
A year ago, oil marketing companies had earned Rs 8.2 per liter of diesel and Rs 10.3 per liter of petrol. In comparison, retail margins in the June 2024 quarter were Rs 2.5 per liter on diesel and Rs 4.4 per liter on petrol, the brokerage firm said. But, the increase in international crude oil and refined fuel prices during the first quarter of the current financial year was not fully reflected in the domestic prices, due to which retail margins became negative.
Companies suffer loss of Rs 75,000 crore due to selling at low prices
Petroleum and Natural Gas Minister Hardeep Singh Puri on Thursday said OMCs suffered a loss of about Rs 75,000 crore in the quarter to June due to selling petrol, diesel, liquefied petroleum gas (LPG) and jet fuel at below market rates. The prices of petrol and diesel at the refinery gate are determined according to international fuel prices. OMCs then add transportation, marketing and distribution costs, dealer commission and retail margins to determine the price of oil sold at the pump.
Earning of Rs 12 on 1 liter petrol in the third quarter of 2024-25
When domestic pump oil prices do not move in line with international oil prices, retail margins are squeezed, as happened during the June quarter. Similarly, when international fuel prices fall but pump prices remain the same, retail margins increase. Therefore, retail margins fluctuate with international oil price trends. According to ICICI Securities, in the last two financial years, petrol margins had reached an all-time high of Rs 12 per liter in Q3 2024-25, while diesel margins had reached an all-time high of Rs 8.2 per liter in Q1 2025-26.
Oil companies made huge profits for 4 years
Following the outbreak of the Ukraine war in early 2022, which sent global oil prices soaring, OMCs abandoned the practice of regularly changing retail prices in response to international markets. There have been little changes in pump prices over the past four years, allowing companies to earn higher margins when global oil prices fell, but facing low or negative margins when international prices rose.
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