Despite easing oil supplies Indian oil companies reel under a loss Rs 530 crores daily.Read to know why..

India’s state oil companies are losing around Rs 530 crore a day right now, and the story is a straightforward mismatch: crude has gone up, pump prices haven’t moved. Marketing margins have slipped into negative territory — roughly Rs 8 a litre on petrol and Rs 9 a litre on diesel — with LPG under-recoveries running close to Rs 300 a cylinder as of September, according to rating agency ICRA.

Why did this happen? Not because of anything happening inside India — it’s all about oil-producing regions abroad. Indian crude oil jumped to $117.4 a barrel on September 21, way up from the roughly $66 a barrel average India had been paying through most of this financial year. Three things caused this spike, all around the same time: fresh fighting between the US and Iran, Saudi Arabia’s East-West pipeline shutting down, and Houthi attacks increasing in the Red Sea — a route a huge amount of the world’s oil passes through on ships. Put those three together, and oil got expensive fast.

None of those are the kind of disruption that resolves in a news cycle, which is part of why this isn’t being treated as a blip.

ICRA’s Prashant Vasisht put a number on what’s at stake: at current crude levels, the daily loss to OMCs works out to Rs 530 crore, and he flagged that full-year earnings will hinge on where crude settles, how refining margins move, whether retail prices get revised, and how much the government steps in on LPG. That last piece already has a paper trail — the cumulative negative LPG buffer has swollen to Rs 61,940 crore as of June 30, since international price hikes haven’t been passed on to consumers. Per-cylinder losses have actually eased a bit, from Rs 500 in the first quarter to around Rs 300 now, but still on the weaker end..

There’s a secondary squeeze most coverage skips: refining margins are elevated too, which sounds like good news but isn’t, for OMCs specifically. Singapore refining margins have stayed above $10 a barrel since the crisis began, helped along by refinery outages across West Asia and further supply damage to Russian refining capacity. Strong cracks are great if you’re exporting fuel; they’re just another cost pressure if you’re a domestic marketer holding prices flat. On top of that, export levies on diesel and jet fuel have stayed high — Rs 20 a litre and Rs 15 a litre respectively since September 16 — a policy lever meant to capture some of that refining windfall before it leaves the country.

Bottom line: this is a cash-flow problem before it’s a company-specific one. Expect heavier short-term borrowing at OMCs unless retail prices move or Delhi widens LPG support.