Rupee's Slide Threatens Fuel Price Gains: SBI Report Insights

An SBI Research report warns that further depreciation of the Indian Rupee could negate the benefits of recent fuel price hikes meant to mitigate oil marketing companies' losses. The report highlights looming economic pressures, including exchange rate risks, volatile crude markets, and anticipated inflation impacts.

An SBI Research Ecowrap report has indicated that the Indian Rupee's depreciation risks nullifying recent price hikes of Rs 3 per litre on petrol and diesel. This warning comes as oil marketing companies face significant losses due to high crude oil prices and stagnant retail pricing.

The report highlights that oil marketing companies are incurring daily losses of Rs 1000 crore, which could amount to Rs 3.6 lakh crore annually. It points out that the recent fuel price hike was a strategic move to alleviate some financial pressure, potentially providing relief of Rs 52,700 crore for the companies, though this covers just 15% of projected losses for FY27.

Crude oil markets are reportedly under duress due to geopolitical instability and dwindling supplies, further complicating economic planning. SBI Research called for a comprehensive policy to manage external sector risks, including exchange rates and potential impacts on inflation, revising CPI inflation forecasts to 4.7% for FY27 amid these challenges.