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The Indian government and state-run Oil Marketing Companies (OMCs) have adopted a "wait and watch" stance on retail fuel pricing as global crude markets face heightened volatility, according to Vivekanand Subbaraman, Research Analyst at Ambit Institutional Equities.
Speaking to ANI News on Wednesday, Subbaraman stated that refiners are prioritizing supply security and absorbing financial strain to insulate domestic consumers from global price shocks. He noted that India remains heavily dependent on global crude imports and vulnerable to disruptions along critical maritime transit corridors such as the Strait of Hormuz. Recalling the supply tightness during March and April, which temporarily affected cooking fuel availability for industrial and commercial users, Subbaraman praised the swift response from authorities. "The country was facing a supply crunch of cooking fuel... I think the government handled that phase well," he said. However, significant operational challenges remain for state refiners due to shrinking Russian crude discounts and persistent volatility in West Asian supply lines. To maintain market stability, OMCs executed dynamic rearguard measures, though this came at a heavy cost to their balance sheets. Major refiners like HPCL and BPCL reported quarterly losses as they absorbed cost pressures to keep pump rates steady. "There was unprecedented coordination between the government and industry stakeholders to ensure that priority segments remained available and there were no shortages," Subbaraman explained, adding that repairing company P&Ls will take time. Addressing the retail pricing outlook across petrol, diesel, and domestic LPG, Subbaraman observed that authorities remain reluctant to expose households to daily international price swings. While commercial LPG and industrial fuels adjust dynamically with crude benchmarks, retail rates are far more sensitive. "Retail fuel pricing is a bit more sensitive because the government does not want retail fuel prices to fluctuate at the fuel pump every day," he noted. Looking ahead, Subbaraman cautioned that if geopolitical tensions prolong and crude volatility continues, price revisions may eventually become unavoidable. In the interim, state refiners are exercising strict financial discipline, with companies like HPCL deferring discretionary capital expenditure until global market conditions stabilize. (ANI)
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