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Informist, Wednesday, Mar. 11, 2026

  

NEW DELHI – Indian Oil Corp. Ltd., Bharat Petroleum Corp. Ltd., and Hindustan Petroleum Corp. Ltd. are expected to face heightened margin and cash-flow volatility amid the ongoing conflict in West Asia, Moody's Ratings said in a research report Wednesday. A limited adjustment in domestic fuel prices will put pressure on oil marketing companies' cost, the report said.

 

India is highly dependent on imported oil and gas, which exposes the oil marketing companies directly to any change in the global energy prices. In financial year 2024-25 (Apr-Mar), India imported 88% and 51% of oil and gas, respectively, Moody's said. As international prices rise, the procurement and refining costs also increase, but the realised prices of oil marketing companies for key fuels do not adjust in line with costs, and this gap compresses marketing margins and weakens their operating cash flows, particularly during periods of sustained high energy prices, Moody's said.

 

The ratings agency expects the recent increase in energy prices to also put pressure on the earnings of oil marketing companies in the near term. "We expect their earnings to recover as prices subsequently normalize," the ratings agency said. 

 

Moody's also expects the oil marketing companies to accumulate losses from selling liquefied petroleum gas below international prices in the domestic market. Domestic LPG prices were hiked by INR 60 per 14.2-kilogram cylinder Saturday amid the recent disruption in supply of LPG due to the West Asia conflict. The rating agency, however, expects oil companies to be compensated later by the government.

 

"In August 2025, the government approved INR 300 billion in total compensation for the three oil marketing companies, which will be disbursed in 12 equal monthly installments starting November 2025. The oil marketing companies had incurred losses totaling close to INR 400 billion in fiscal 2024-25," the rating agency said.

 

The government Monday issued orders to refineries to priortise the production of LPG for household consumption. On Mar. 5, the government had asked refineries to prioritise the use of propane and butane for domestic LPG rather than for petrochemical production. In 2025, LPG imported from West Asia was 46.9% of India's total LPG imports that year.  End

 

Reported by Astha Oriel

Edited by Ashish Shirke

 

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