A story about ₹100/litre losses, elections, and the most expensive political calculation in India's history.
Imagine running a shop where you buy goods at ₹200 and sell them at ₹100. Every customer who walks through the door costs you money. And yet you can't close the shop — because the government needs you open.
That, in essence, is what India's three public sector oil marketing companies — Indian Oil, BPCL, and HPCL — have been doing for the past 11 weeks.
The scale of the problem
India's crude oil import basket averaged $69 per barrel in February 2026, before the Iran war. By April, it had averaged $113–114 per barrel. That's a 65% increase in their input cost in less than 60 days.
Officials from the oil ministry reportedly stated that retailers were losing ₹100 per litre on diesel and ₹20 per litre on petrol at prevailing prices.
India sells roughly 225 million litres of diesel per day. At a ₹100/litre loss, that's ₹22,500 crore in losses — every single day. In 70 days, the cumulative loss from diesel alone crosses ₹15 lakh crore. That number is not hyperbole. It's the arithmetic of selling fuel below cost in the world's third-largest oil-consuming nation.
Why didn't they just raise prices?
The hike came exactly 16 days after assembly elections concluded in four states.
This is India's fuel price reality. When elections are near, fuel prices are frozen — regardless of what crude costs. It's been this way since 2022. The last major revision before May 15, 2026, was in April 2022 — a gap of almost exactly four years.
The India's import burden was shared across four pillars: the OMCs absorbing through compressed margins; the central government through forgone excise revenues from earlier duty cuts; industrial and commercial users who had already moved to market-linked prices; and finally, the ₹3 hike passed to retail consumers.
The upstream vs. downstream divide
While OMCs bled, upstream players partied.
ONGC produces roughly 22 million tonnes of crude oil per year domestically. At $113/barrel (roughly ₹9,400/barrel), versus $69/barrel pre-war, every barrel now delivers ₹3,700 of extra revenue. On 155 million barrels of annual production, that's an additional ~₹57,000 crore in annual profit — a pure windfall.
Oil India, the smaller state-owned upstream producer, is in a similar position. For them, $100+ crude is like a bonus cheque from the Iran war they didn't ask for.
What comes next?
The ₹3 hike might be only one-tenth of the full correction needed. The OMCs are still losing money at current crude prices. Another round of hikes — ₹5–8 per litre — is likely if crude stays above $100 through June.
Every sustained $10/barrel increase in Brent translates to 30–60 basis points of CPI pressure over 6–9 months. With crude up $45/barrel from pre-war levels, India is staring at 1.5–2.5% of additional inflation by Q3 2026.
That's not just a number in an RBI report. That's the real cost of wars fought 4,000 kilometres away from Delhi — felt at every petrol pump, every truck, every kitchen in India.
