Oil marketing companies (OMCs) will stop bleeding petrol and diesel only if crude slips to about $85-87 a barrel, because current pump prices still leave them with losses of Rs 7-8 a litre despite a recent hike and duty cuts that the government is reluctant to reverse.
Jefferies' top analyst Mahesh Nandurkar said even after an 8% increase in retail fuel prices, auto fuels are “currently being sold at a loss of ~Rs7-8/ltr,” with state-owned OMCs absorbing these losses. These under-recoveries reflect the gap between elevated international product prices and politically constrained domestic pump prices.
