New Delhi [India]: According to a report by Antique Stock Broking, oil marketing companies (OMCs) are probably going to cut down on losses from selling domestic LPG cylinders over the next months as a result of the recent increase in LPG prices and the decline in global fuel costs.
Beginning in April, the government raised the cost of LPG cylinders by Rs 50. Additionally, it increased the excise tax on fuel and gasoline by two rupees per litre.
The research states that the increase in LPG prices is obviously intended to make up for the under-recoveries, or losses, that OMCs are experiencing when they sell LPG cylinders for less than their cost. These under-recoveries were starting to cost money.
It said, “With the latest hike, LPG losses will fall to INR 160/cyl in May-25, which we estimate will decline to INR 60/cyl by 2QFY26”.
The analysis predicted that LPG losses will drop to only Rs 60 per cylinder by the second quarter of the fiscal year 2025–2026 (July to September 2025), and then to Rs 160 per cylinder in May 2025.
A decline in crude oil prices and a seasonal decline in global propane prices, particularly from Saudi Arabia, are the reasons for these smaller losses. By August, propane prices should have dropped by around USD 525 per tonne, or USD 85 per tonne.
If these trends continue, LPG under-recoveries may drop much lower by August, to Rs 60 per cylinder, and maybe even to nil.
According to the analysis, OMCs would still make enough money from their marketing margins to offset any refining losses even if retail gasoline prices are lowered in the next months, provided that crude oil stays at around USD 65 per barrel.
According to the research, OMCs are doing well right now. Auto fuel sales are bringing in a lot of money for them, and Singapore refining margins, or GRMs, are predicted to rise as well. This is a result of continuous refinery closures, improved light and heavy crude oil prices, and the reversal of supply reductions by oil-producing nations.
The study also said that Saudi Arabia is anticipated to reduce its official selling price (OSP), which would contribute to the improvement of refining profits.
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