As Brent crude breached the $100-a-barrel mark on Wednesday for the first time since July 24, while the Indian crude basket climbed to $108.91/bbl on September 8, intensifying pressure on oil marketing companies (OMCs) and India’s crude import bill as the US-Iran conflict continues to disrupt West Asian supplies.
However, official sources indicated that another retail petrol and diesel price revision may depend on crude sustaining above current levels.
Fuel price hike unlikely
“Historically, retail fuel price revisions have occurred when the Indian crude basket averaged around $106/bbl. Therefore, unless crude prices sustain levels well above $110/bbl, a further increase in retail fuel prices appears unlikely,” Pankaj Srivastava of Rystad Energy told FE.
The last retail fuel price revision was on May 25, when state-run OMCs raised petrol and diesel prices, taking cumulative increases since May 15 to around ₹7.5/litre. Since then, prices have remained unchanged, with petrol at ₹102.12/litre and diesel at ₹95.20/litre in Delhi.
The Indian crude basket has averaged $102.11/bbl so far in September, up 13.2% from $90.19/bbl in August. Brent futures rose as high as $100.19/bbl and were trading at $99.93, up $2.01, or 2.05%, while WTI gained $1.49, or 1.6%, to $94.52. Brent has risen about 25% since early August.
“With escalation in hostilities between Iran and the US, Brent prices have crossed the $100/barrel mark today and the Indian crude basket is at around $109/barrel. At the average price for the month of September till date, marketing margins on petrol are negative ₹5/litre and diesel at negative ₹23/litre and under-recoveries on domestic LPG are at ₹200/cylinder,” said Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings, Icra.
Srivastava said every $10/bbl increase in crude prices adds roughly $42 million a day to India’s import costs, or around $12-15 billion annually.
India’s crude import bill has already risen sharply. The country spent $63.37 billion in the first four months of FY27, up about 56% from $40.55 billion in the corresponding period of FY26.
The latest crude spike also compounds pressure on state-run OMCs. Equirus data for the week ended September 4 showed petrol marketing margins worsening to negative ₹4.2/litre from negative ₹2/litre a week earlier. Diesel marketing margins remained at negative ₹24.9/litre, against negative ₹24.8/litre. Integrated margins, including refining, stood at ₹12/litre for petrol and ₹18.2/litre for diesel.
OMCs face financial pressure
IOC, BPCL and HPCL entered the current quarter with stretched finances. Their aggregate standalone debt rose 37% quarter-on-quarter to ₹2.3 lakh crore in Q1FY27, while combined EBITDA swung to negative ₹25,800 crore from positive ₹32,300 crore in Q4FY26, a deterioration of ₹58,100 crore.
PPAC data show the Indian crude basket averaged $114.48/bbl in April, $106.23 in May, $83.22 in June, $82.04 in July and $90.19 in August. For September, the basket is derived from 77.81% Brent Dated and 22.19% Oman-Dubai crude.
The latest rise in oil followed attacks by Iran-backed Houthis on Saudi energy facilities, which set oil installations ablaze and raised concerns over an expansion of the conflict. The attacks also threaten crude shipments through the Red Sea, an alternative route to the Strait of Hormuz, where flows have been severely curtailed since the Iran war began on February 28.
Brent has traded as high as $126.41/bbl on April 30 since the conflict began.
While non-OPEC producers including the US, Canada and Guyana have increased production, the International Energy Agency last month estimated that global oil supply would decline by 4.3 million bpd, or about 4%, this year.