New Delhi

State-owned oil marketing companies are currently incurring heavy losses on retail fuel sales, with petrol being sold at an estimated loss of Rs 14 per litre and diesel at Rs 18 per litre, as international crude prices remain high while domestic pump rates stay unchanged.

According to rating agency Icra, the sharp rise in energy prices following the West Asia conflict has squeezed fuel retailers’ margins. Crude oil, which traded around USD 70-72 per barrel before the crisis, has now climbed to nearly USD 120-125 per barrel.

Icra said if present conditions continue, companies may also face an under-recovery of around Rs 80,000 crore on LPG sales during the current financial year. At the same time, the fertiliser subsidy bill could rise to between Rs 2.05 lakh crore and Rs 2.25 lakh crore, exceeding the budgeted Rs 1.71 lakh crore.

The agency noted that disruptions in the Strait of Hormuz, which carries nearly one-fifth of global oil and LNG trade, have tightened supply of fuels, fertilisers and chemicals, pushing up costs across sectors.

Higher prices of ammonia, sulphur and natural gas are also affecting fertiliser producers, while city gas distributors are facing pressure due to increased gas costs and rupee weakness. CNG margins are expected to shrink as only part of the cost increase can be passed on to consumers.

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Icra maintained a stable outlook for crude refining companies but gave a negative outlook for fuel retailing, fertilisers, chemicals and petrochemicals, warning that profitability pressures may continue unless geopolitical tensions ease and supply chains stabilise.