‘How long can oil companies absorb losses?’: Hardeep Singh Puri on fuel prices

New Delhi: Oil minister Hardeep Puri on Tuesday sought to calm concerns over a possible fuel price hike after Prime Minister Narendra Modi urged citizens to reduce petrol and diesel consumption through greater reliance on public transport.

Puri however acknowledged worries over how long oil companies can continue absorbing losses from selling fuel below market rates to shield consumers from the turmoil in global energy markets due to the Iran war.

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"How long will the oil companies be able to take it? Frankly, that worries me," Puri said at an industry conference.

He also underlined that India would need to build larger oil and gas stockpiles to deal with supply disruptions such as those triggered by the ongoing war.

"I think the time has come - and everyone in the government I have spoken to shares this view - that we will need to stock up even more," the minister said, while raising questions over the optimal level of strategic storage for a large energy consumer like India.

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India's strategic petroleum reserves can currently cover about eight days of national consumption of 5 million barrels per day, far lower than other major importers such as China, Japan, and South Korea. The International Energy Agency recommends that member countries maintain reserves equivalent to 90 days of imports.

"The problem is that if you are a country like India, with a huge coastline and geographical proximity to West Asia, what kind of reserves or storage are you looking at?" Puri said. Traditionally, the government has looked at holdings, he said, adding that "maybe that is something we need to correct." "I want the strategic reserve to be, as per the definition, strategic, located in a safe place, and it should be there for me to draw," he said.