S&P Global Ratings has warned that profits of major Indian oil marketing companies, including Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL), could come under pressure as elevated crude oil prices coincide with the possibility that retail petrol and diesel prices may remain stable to contain inflation.
The warning follows a recent rise in global crude prices linked to tensions in West Asia and escalating geopolitical friction between the United States and Iran. Brent crude moved above $100 per barrel earlier this week amid heightened concerns over developments around the Strait of Hormuz, a critical maritime route for global energy shipments. Prices subsequently retreated to around $88 per barrel on Wednesday.
S&P Global Ratings has raised its forecast for the average Brent crude price in 2026 by $5 to $65 per barrel.
The agency said India is expected to continue meeting its crude oil requirements through maritime import routes while diversifying sourcing through purchases from countries including Russia and those in South America. India is currently importing approximately 1.1 million barrels per day of crude oil from Russia and about 142,000 barrels per day from Venezuela.
India imports around 88 percent of its total crude oil requirements and is the world’s third-largest oil importer. The country consumes roughly 5.8 million barrels of oil per day, of which approximately 2.5 million to 2.7 million barrels arrive via the Strait of Hormuz.
In addition to crude shipments, about 55 percent of India’s liquefied petroleum gas (LPG) consumption and roughly 30 percent of its liquefied natural gas (LNG) consumption also depend on supplies transported through the same route.
S&P Global Ratings cautioned that despite this dependence, India maintains limited energy reserves. The country’s strategic petroleum reserves are equivalent to roughly 10 days of consumption, while commercial reserves can meet about 65 days of demand.
Stockpiles of LPG and LNG are comparatively lower. LPG inventories are estimated to cover approximately 25 to 30 days of consumption, while LNG stocks are considered sufficient for around 10 to 12 days.
According to S&P Global Ratings, government directives combined with rising crude oil prices could compress the margins of oil marketing companies if petrol and diesel retail prices remain unchanged. Under such conditions, the profitability of IOC, BPCL, and HPCL could face pressure.
In contrast, upstream oil producers such as Oil and Natural Gas Corporation (ONGC) may benefit from higher crude prices because increased selling prices can result in higher revenue from oil production.
Domestic LPG prices in India are regulated by the government. Despite higher crude oil prices, oil marketing companies including IOC, BPCL, and HPCL may be required to maintain stable LPG prices as part of efforts to manage inflation, which could further affect company profitability.
The government may provide relief through budgetary support or reductions in excise duties if necessary, similar to measures implemented during the Russia–Ukraine war.
India plays a significant role in the global oil market not only as a major consumer but also as a refining hub. The country’s refineries process imported crude oil into petroleum products including petrol, diesel, and other refined fuels, which are exported to markets across Asia and Europe. As a result, India’s crude purchasing activity has broader implications for stability in the global oil supply chain.
