The government’s recent 8.5% increase in aviation turbine fuel (ATF) prices for domestic airlines is expected to provide temporary relief to oil marketing companies (OMCs). Analysts from Nomura, a global brokerage firm, have calculated that state-owned fuel retailers are facing significant losses due to the surge in global oil prices. At present rates, OMCs are experiencing a loss of about Rs 64 per liter on domestic ATF sales, translating to a marketing loss of approximately $109 per barrel.
Nomura’s analysis indicates that Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation are collectively facing annualized losses of Rs 23,600 crore, Rs 9,500 crore, and Rs 5,300 crore, respectively, due to ATF sales. The recent hike in ATF prices for domestic carriers amounts to Rs 8,289.04 per kilolitre, representing an increase of 8.56% from the previous month to Rs 1,04,927.18 per kilolitre.
Despite the significant hike in prices, it falls short of what would have been justified by global oil price movements. Foreign carriers and non-scheduled operators faced a steeper increase of 114.5% to Rs 2,07,341.22 per kilolitre. While ATF constitutes a small percentage of total marketing volumes for OMCs, state-owned retailers hold a dominant market share of over 90% in this segment, with about 65% of India’s total ATF sales directed towards domestic airlines.
In addition to the ATF price hike, commercial LPG and premium petrol rates were also raised due to firm energy trends. Commercial LPG prices saw an increase of approximately 10%. Nomura highlighted Gujarat Gas as particularly affected among city gas distributors, attributing this to its heavy reliance on short-term and spot liquefied natural gas procurement, where prices have doubled since the conflict began on February 28, 2026.
The brokerage firm also pointed out that the windfall tax does not apply to Reliance Industries’ special economic zone refinery. Following these developments, shares of state-owned OMCs such as IOCL, BPCL, and HPCL witnessed a decline of up to 5% on the BSE during intra-day trading.
