India undertook two rounds of fuel price hike in a matter of 7 days. But is it adequate to address rising concerns as crude remains elevated around $110 levels. According to a recent JM Financial report, the sharp spike in global crude oil prices after the West Asia conflict has opened up a Rs 1.62 lakh crore hole in India’s oil import bill for the June quarter of FY27.
The brokerage estimates that Brent Crude could average nearly $110 per barrel during the quarter, compared to around $70 per barrel before the Iran-related tension escalated. That sudden jump in oil prices is now beginning to ripple through India’s economy, that is, from government finances to fuel companies and consumers.
OMCs still losing Rs 920 crore a day despite recent fuel price hike
The biggest concern, however, is the pressure building on state-run Oil Marketing Companies (OMCs) including Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation.
According to the brokerage report, despite the recent Rs 3 per litre increase in petrol and diesel prices on May 15, OMCs are still losing nearly Rs 920 crore every single day through fuel under-recoveries.
JM Financial stated, “In Q1FY27E, OMCs are likely to incur Rs 84,500 crore or Rs 920 crore/day under-recoveries.”
The brokerage further added that OMCs could also face a “likely cash loss of Rs 54,000 crore or Rs 580 crore/day.”
The financial breakdown: Who will bear the burden?
The report indicates that the impact of higher crude prices will not fall on just one section of the economy. Instead, the pain may get distributed across fuel companies, the government, refiners and consumers.
| Stakeholder | Estimated Burden |
| Oil Marketing Companies (OMCs) | Rs 84,500 crore |
| Government of India | Rs 33,500 crore |
| Refining Companies | Rs 9,000 crore |
| Consumers & Other Businesses | Rs 35,000 crore |
As per the brokerage report, OMCs are likely to take the biggest hit because retail fuel prices are still not fully aligned with the sharp jump in crude oil costs.
JM Financial said, “India’s crude import bill is likely to jump by Rs 1.62 lakh crore in Q1FY27E due to a ~USD 40/bbl spike in crude price.”
The Government of India may also face pressure due to the earlier Rs 10 per litre excise duty cut on petrol and diesel announced in March 2026. Refiners, meanwhile, could be impacted through windfall taxes.
Consumers are also expected to bear part of the burden through higher petrol, diesel and Liquefied Petroleum Gas (LPG) prices.
Deep dive: Why another fuel price hike may still be needed
The most striking part of the JM Financial report is its estimate on how much fuel prices may still need to rise.
According to the brokerage house, even after the recent Rs 3 per litre hike, OMCs are still operating below normal profitability levels.
JM Financial said, “OMCs still need fuel price hike of Rs 6–9/ltr to avoid EBITDA loss and Rs 14–17/ltr to earn normalised EBITDA.”
This means fuel retailers may still need much steeper price hikes if crude oil prices remain elevated near current levels.
The brokerage estimates that at Brent crude prices of around $112 per barrel, OMCs are still losing nearly Rs 6 per litre at the Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) level.
If crude prices move closer to $117 per barrel after factoring in higher freight and premium costs, the losses could widen to nearly Rs 9 per litre.
JM Financial also highlighted that OMCs’ integrated auto-fuel gross margin has turned negative.
The report stated, “Its currently at negative Rs 1.6/ltr versus historical average of +Rs 12.6/ltr.”
Historically, OMCs earned around Rs 12.6 per litre in integrated fuel margins. According to the report, those margins have now slipped into negative territory because of soaring crude costs.
The silver lining: Stronger balance sheets than before
Despite the pressure, the brokerage believes the current situation is not as severe as the Russia-Ukraine oil shock period from FY23.
One major reason is that OMC balance sheets are currently much healthier.
According to JM Financial, the consolidated net debt-to-equity ratio of OMCs currently stands at around 0.52x. During the Russia-led crude spike, the ratio had climbed to nearly 1.16x.
The report stated, “OMCs, in terms of balance sheet strength, can absorb current quarterly under-recoveries of Rs 82,500 crore for two–three quarters.”
However, the damage could still be significant.
JM Financial estimates that current quarterly cash losses could lead to nearly 10% erosion in OMC book value by the end of Q1FY27.
The brokerage also noted that every Rs 1 per litre hit to auto-fuel margins reduces OMC book value by around 0.2% to 0.4% every month.
What investors need to watch
Much now depends on two key factors – crude oil prices and government policy decisions.
If tension in West Asia continues to keep oil prices elevated, fuel retailers may be forced to push through more petrol and diesel price hikes in the coming weeks.
At the same time, investors will closely watch whether the government steps in again through tax adjustments or other support measures to reduce pressure on OMCs.
Disclaimer: This article covers a developing macroeconomic situation and incorporates market analysis and projections from a brokerage report; the figures and price targets mentioned do not constitute investment recommendations or direct buy/sell calls. Investors should consult a SEBI-registered financial advisor before making any decisions related to Oil Marketing Company (OMC) stocks. This disclaimer has been generated using AI to support user well-being and responsible content consumption.