Winning Bizness Desk
Mumbai. Jio-BP, Nayara cap diesel sales as crude crosses $110, widening losses for Indian oil companies
Diesel supplies at some private fuel stations have been capped as international crude prices have surged amid renewed conflict and tensions in the Middle East.
Media reports say Jio-BP has limited diesel sales to 50 litres per vehicle at several outlets, while Nayara Energy has set a higher limit of 70 to 200 litres at a time at some of its stations.
The restrictions come as petrol and diesel prices in India remain unchanged despite a sharp rise in crude oil prices, putting pressure on oil marketing companies.
Private pumps impose temporary diesel limits
At several Jio-BP outlets, a vehicle is being supplied up to 50 litres of diesel in a single transaction. Some outlets have also capped their total daily diesel sales at 6,000 litres.
Nayara Energy has also restricted diesel sales at some of its petrol pumps, with supplies reportedly limited to 70 to 200 litres at a time.
- Jio-BP: Up to 50 litres per vehicle at several outlets
- Some Jio-BP outlets: Daily diesel sales capped at 6,000 litres
- Nayara Energy: 70-200 litres supplied at a time at some pumps
However, there is no such restriction at petrol pumps operated by Indian Oil, Bharat Petroleum and Hindustan Petroleum, which together account for more than 90% of the country's fuel retail outlets.
Long-haul trucks face supply problems
The restrictions could create problems for long-distance truck operators and other heavy commercial vehicles, even though government-owned fuel stations continue to supply diesel without such limits.
The impact could be greater in rural and highway areas where fuel stations are located far apart. Drivers travelling long distances may not be able to fill larger quantities of diesel at private outlets, forcing them to make additional stops during their journeys.
Crude prices surge sharply amid Middle East tensions
International crude prices have risen sharply following renewed conflict and tensions in the Middle East. Brent crude touched $117.4 per barrel on September 21, compared with an average price of around $66 per barrel earlier this year.
The sharp increase has raised the cost of crude for Indian oil companies, which continue to sell petrol and diesel at existing domestic prices.
Companies absorb higher fuel costs
According to rating agency Icra, oil companies are currently facing a direct loss of around Rs 8 per litre on petrol and Rs 9 per litre on diesel.
The losses have increased because retail fuel prices have not been raised despite the rise in international crude prices. Icra estimates that Indian Oil, Bharat Petroleum and Hindustan Petroleum are together facing a daily loss of around Rs 530 crore.
Private fuel retailers have therefore reduced diesel sales at some outlets to limit their losses.
Saudi supply disruption adds to diesel pressure
The pressure on diesel supplies has also increased because of disruption in crude shipments from Saudi Arabia. Saudi oil company Saudi Aramco stopped sending crude to India after an attack on its pipeline, according to the report.
Indian oil companies are now having to source crude from other markets at higher prices. This has added to the pressure created by the rise in global crude prices.
No immediate nationwide diesel shortage reported
Officials have said there is no shortage of diesel in the country. The restrictions imposed by some private companies are temporary measures aimed at limiting losses rather than a nationwide shortage of fuel.
The situation is being closely watched because sustained high crude prices could increase pressure on domestic fuel prices.
Higher crude could put retail prices under pressure
Petrol and diesel prices have so far remained unchanged for consumers despite crude prices rising above $110 per barrel.
If international crude prices remain in the $110-120 range for an extended period, changes in retail fuel prices could be considered to offset the losses being incurred by government-owned oil marketing companies.
