Bulk Buyers Opt for Retail Supplies of OMCs to Secure Cheaper Diesel, Straining Stocks

Diesel Shortages Hit India as Industrial Customers Favor Cheaper Retail Outlets

Industrial customers in India are increasingly opting to buy diesel from cheaper retail outlets of state-run companies rather than the usual bulk supply points, leading to shortages at the pumps in some areas. According to Sujata Sharma, a joint secretary in the federal oil ministry, diesel sales at pumps in some regions have jumped 20% to 30% as prices for industrial buyers climb to 40 to 42 rupees a litre higher than retail pump prices.

The retail price of a litre of diesel is 91.58 rupees in New Delhi. This disparity in prices is causing a significant spike in demand, which is adding to losses for state-run Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp. These companies are already selling diesel at below market prices for retail customers.

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Indian state retailers are monitoring sales at outlets facing shortages and are seeking support from local authorities and police to curb purchases by bulk consumers. Preliminary fuel sales data show Indian state retailers' diesel sales from May 1 to 15 surged nearly 11.5% to about 3.8 million metric tons from a year earlier, while gasoline sales rose nearly 19% to 1.8 million tons.

State-run fuel retailers are also facing increased demand due to higher prices charged by private fuel retailers and rising consumption from farmers using diesel-powered generators for irrigation during the harvesting season. To mitigate these issues, the companies are focusing on maintaining seamless supplies across smaller cities and remote markets, where localized demand spikes and precautionary buying tendencies have been observed in recent days.