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The research report of State Bank of India, the country’s largest public sector bank, says that if the rupee weakens further against the US dollar, then the benefits to oil companies from increasing the prices of petrol and diesel may be completely lost.
Relief from increasing fuel prices
According to SBI’s Ecowrap report, the increase in the prices of petrol and diesel by Rs 3 each per liter is expected to provide big relief to the government oil companies. This can reduce the loss of companies due to under-recovery i.e. selling fuel below cost by about Rs 52,700 crore. According to the report, this amount is about 15% of the total loss estimated in the financial year 2026-27.
Impact of West Asia crisis
Government oil marketing companies had increased the prices of petrol and diesel on Friday. The reason behind this was said to be the ongoing tension in West Asia and the sharp rise in crude oil prices in the international market. The increase in crude oil prices has a direct impact on import dependent countries like India, because more foreign exchange has to be spent.
Rupee weakness becomes a big concern
The report says that if the rupee weakens further, the cost of importing crude oil will increase rapidly. In such a situation, the entire benefit from increase in fuel prices may be lost. According to SBI, if the rupee falls by just Rs 2 more from the current level, the additional income of oil companies will be lost in import costs.
Rupee reaches record low level
During trading on Friday, the rupee fell below the level of 96 against the dollar. Finally the Indian currency closed at a record low of 95.81 per dollar. It has been said in the report that the rupee has already reached such a level from where further fall can increase the problems for the oil companies.
Huge loss to oil companies
The report quoted Petroleum Minister Hardeep Singh Puri as saying that government oil companies are incurring a loss of about Rs 1,000 crore every day. On an annual basis, this loss can reach around Rs 3.6 lakh crore.
