Indian oil market companies (OMCs) are estimated to be incurring under-recoveries of ₹8 per litre on petrol, ₹9 per litre on diesel sales and nearly ₹300 per domestic LPG (liquefied petroleum gas) cylinders, according to credit rating agency ICRA.

The combined impact translates into an estimated daily loss of about ₹530 crore from the sale of petrol, diesel and cooking gas, ICRA analysts said.

“The escalation of the conflict in West Asia and the [resulting] disruption to key oil supply routes has led to a sharp increase in crude oil prices, which has also resulted in sizeable marketing and LPG under-recoveries for oil marketing companies,” said Prashant Vashisht, senior vice-president and co-group head of corporate sector ratings at ICRA.

The pressure on LPG costs has been amplified by supply dynamics in the global market.

Separately, Mr. Vashisht explained large volumes of the bottled hydrocarbon gas are concentrated among a few producers, including the U.S., Australia and Saudi Arabia.

Mr. Vashisht added that higher freight costs whilst procuring from U.S. puts additional pressure on the LPG dynamics.

“The U.S. alone produces about 27 million tonnes of LPG. That is to do with the shale gas revolution there and more natural gas [that is produced]. Therefore, I think volumes would be more available in that geography than compared to others, say like Australia,” he said, responding to a query from The Hindu about the essentiality of LPG from U.S.