Fuel Prices in India on June 2: Latest Rates Ahead of Potential Hike Amid Rising Brent Crude

Global Tensions Weigh Down Asian Markets Amid Uncertainty Over Iran-US Peace Deal

The ongoing missile attacks in the restive Gulf region have created uncertainty over the future of the Iran-US peace deal, leading to a decline in Asian stock markets. The market is also experiencing a fresh rally in Brent crude rates, which are currently hovering at $95 per barrel. In India, the suspense continues as to whether there will be any new hike in the petrol and diesel rates or not.

State-Run Oil Marketing Companies Incur Significant Losses

Despite four consecutive increases in petrol and diesel prices last month, state-run oil marketing companies (OMCs) are still incurring significant losses. According to analysts, the OMCs are suffering losses of about Rs 5.5 per litre on petrol and Rs 4.5 per litre on diesel. This is due to the fact that the OMCs are buying crude at elevated international prices while selling petrol and diesel at regulated domestic rates.

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Escalating Conflict Pushes Global Crude Oil Prices

Analysts estimate that with the escalating conflict in West Asia pushing global crude oil prices above $100 per barrel, OMCs may need to raise auto fuel prices by as much as Rs 12 per litre to achieve break-even levels. This is in line with earlier reports by Moneycontrol, which stated that analysts say that the oil marketing companies may have to increase the fuel rates by Rs 12 to offset the losses.

Government Data Reveals Significant Daily Losses

According to government data, the three state-owned fuel retailers - Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation - are collectively losing around Rs 550 crore per day. This is a significant amount considering the daily losses incurred by the OMCs.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Under-Recoveries on Sale of LPG and ATF

State-run oil marketing companies are currently incurring under-recoveries of about Rs 650 per domestic LPG cylinder due to rising global fuel prices. Additionally, under-recoveries on the sale of aviation turbine fuel (ATF), or jet fuel, have climbed to around Rs 30 per litre, as reported by Petroleum Ministry Joint Secretary Sujata Sharma on June 1.