OMC under-recoveries shrink sharply as crude oil prices tumble on US-Iran peace deal

The strain on oil marketing companies (OMCs) has lessened considerably after recent fuel price adjustments and government assistance, even as worldwide crude oil prices dropped almost 5 % following the announcement of a US‑Iran peace deal and the reopening of the Strait of Hormuz.

Sujata Sharma, Joint Secretary at the Ministry of Petroleum and Natural Gas, reported that petrol under‑recoveries have dropped by 83 % to ₹3 per litre, down from ₹24 per litre on 1 April.

Diesel under‑recoveries likewise fell sharply, decreasing 75 % to ₹27 per litre from ₹105 per litre over the same timeframe.

This decline comes after four fuel‑price increases enacted by the central government in May, coupled with financial aid to oil retailers while global crude prices remained high.

Under‑recoveries fell to roughly ₹600 crore per day in May after the fourth price revision, an improvement from the nearly ₹750 crore per day recorded on 18 May.

During the final week of May, the government sanctioned an average fuel‑price rise of ₹2.7 per litre, a step projected to cut OMC losses by no less than 44 %.

The staggered adjustments on 15, 19, 23 and 25 May lifted Delhi petrol rates from ₹94.77 to ₹102.12 per litre, and diesel from ₹87.67 to ₹95.20 per litre.

The central government also eased the load by reducing excise duties on petrol and diesel. Officials said the move caused a revenue loss of almost ₹1.23 lakh crore over 78 days, insulating consumers from the full brunt of higher fuel prices.

Crude oil prices slide following US‑Iran pact

Meanwhile, worldwide crude oil prices fell sharply on Monday after US President Donald Trump said Washington and Tehran had sealed a peace deal and that the Strait of Hormuz would be reopened.

The international Brent benchmark slipped as much as 4.9 % to $83.05 a barrel in early trading, while US WTI crude fell 5.74 % to roughly $80 a barrel.

Trump posted on Truth Social that the Iran accord was finalised and he authorised the reopening of the Strait of Hormuz, a key shipping lane that moves nearly one‑fifth of global crude oil.

“I hereby fully authorise the toll‑free opening of the Strait of Hormuz and, at the same time, order the immediate lift of the US naval blockade. Ships worldwide, start your engines—let the oil flow!” Trump wrote.

Reports indicate that the United States and Iran are set to sign a memorandum of understanding in Switzerland later this week.

The reduction in geopolitical tension lifted sentiment across global financial markets. Asian stocks surged, with key indexes like Japan’s Nikkei, South Korea’s KOSPI, Hong Kong’s Hang Seng and Indonesia’s Jakarta Composite posting strong gains.

Domestically, Indian benchmark indexes also moved higher, with the Sensex and Nifty gaining over 1 % as cheaper crude oil brightened the inflation, earnings and overall economic outlook.