PSU Oil Firms Absorb Rs 550 Crore Daily Losses to Shield Consumers Amid West Asia Crisis

New Delhi, May 2026 : Public sector oil marketing companies are currently absorbing losses of nearly Rs 550 crore per day on the sale of petrol, diesel and LPG under directions from the Centre, as the government seeks to protect domestic consumers from the sharp rise in global fuel prices triggered by the ongoing West Asia crisis.

In a statement issued on Wednesday, the Ministry of Petroleum and Natural Gas said that the burden-sharing mechanism was introduced to cushion ordinary consumers from the volatility in international energy markets. The ministry clarified that the protection is meant specifically for retail consumers, including households, farmers and two-wheeler users, and not for industrial buyers whose fuel pricing continues to be linked to global market rates.

The ministry observed that some industrial consumers were diverting their fuel purchases from industrial supply channels to retail outlets in order to take advantage of the lower subsidised retail prices. According to the government, such practices unfairly exploit the consumer-oriented cushion and also place unnecessary pressure on retail fuel outlets, creating local shortages where no actual supply problem exists.

The government pointed out that private oil marketing companies have witnessed a sharp decline in diesel sales this month due to the comparatively higher prices fixed by them. Diesel offtake at private retail outlets and bulk customer channels has reportedly dropped by nearly 38 per cent during the current month. This diverted demand, the ministry said, has shifted almost entirely towards public sector oil marketing company outlets.

At the same time, diesel volumes sold by PSU oil companies to bulk consumers have also fallen by approximately 29 per cent, with those consumers increasingly sourcing fuel from retail pumps instead. The ministry warned that such diversion disturbs the intended distribution system and impacts supplies meant for common consumers.

Taking serious note of the situation, the government has directed industry associations to sensitise their members about the consequences of violating fuel procurement norms. It has also urged states and Union Territories to constitute special enforcement squads and initiate strict action against bulk consumers, hoarders and black marketers found diverting petroleum products meant for retail consumers.

The ministry said that action could be taken under the provisions of the Essential Commodities Act and related control orders against unauthorised stocking, diversion and black marketing of fuel products.

Reassuring citizens over fuel availability, the ministry emphasised that India has more than adequate petrol and diesel supplies to meet both retail and industrial demand. It highlighted that India is currently the world’s fourth-largest refiner, with an installed refining capacity of 258.1 million tonnes per annum spread across 22 operational refineries.

During the financial year 2025-26, India’s domestic petroleum consumption stood at 243.2 million tonnes, while petroleum product exports reached 61.5 million tonnes, reinforcing the country’s position as one of the world’s largest exporters of refined fuel products.

“There is no supply issue of any kind,” the ministry asserted.

The government further said that India’s strong refining capacity, coordinated functioning of public sector oil companies and close cooperation between the Centre, states and industry stakeholders form the backbone of the country’s energy security strategy during the ongoing geopolitical crisis.

The ministry also appealed to citizens to rely only on official communication and avoid rumours or misinformation regarding fuel availability, stating that the present challenge relates to pricing arbitrage rather than any actual shortage of petroleum products.