State Oil Companies End Dealer Credit Amid Losses from Fuel Sales
State-run oil companies in India have ceased providing credit to petrol pump dealers due to unprofitable retailing. Dealers are now required to pay for fuel on the same day instead of the previous 3-5 days of credit. This decision follows a surge in crude oil prices, with Brent futures exceeding $100 per barrel, while domestic fuel prices remain unchanged, resulting in losses for refiners. The companies aim to prevent incentivizing higher sales that lead to increased losses.
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State-run oil companies in India have stopped offering credit to petrol pump dealers, requiring same-day payment for fuel purchases. This shift is a response to unprofitable retail operations, as higher sales are now resulting in greater losses due to rising crude oil prices, with Brent futures above $100 per barrel.
Dealers, who previously provided credit to customers, are also reducing their credit terms. The withdrawal of credit is a strategic move by oil companies to avoid encouraging sales that contribute to financial losses, despite domestic pumps being well-stocked.
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