Any further depreciation of the rupee against the US dollar will fully offset all the gains for the oil marketing companies from the Rs 3 per litre hike in vehicle fuel price, according to SBI Ecowrap.

"The current increase in oil price by Rs 3 is likely to provide relief of Rs 52,700 crore in OMCs under recoveries, which is 15 per cent of the expected total loss of the OMCs in FY27," said the SBI Ecowrap from the State Bank of India's Economic Research Department.

Petrol and diesel prices were hiked by Rs 3 per litre each on Friday, marking the first increase in more than four years, as state-run fuel retailers passed on part of the hit from surging global crude prices triggered by the Iran war.

However, further rupee depreciation can exhaust all these gains by increasing the US dollar price of crude imports.

"Our calculations show that even an additional depreciation of Rs 2 in the rupee (from FY27 current average at Rs 94 stays put) raises the effective crude oil price, pushing the landed import cost, which fully offsets the gains from the current fuel price hike," the report said.

It further said the rupee has already approached a critical depreciation threshold, beyond which further currency weakness could substantially erode the intended benefits of domestic fuel price revisions.

On Friday, the rupee crashed below the 96/USD mark before closing at an all-time low of 95.81 against the US dollar.

Citing figures mentioned by oil minister Hardeep Singh Puri, the SBI report said that OMCs are incurring losses to the tune of Rs 1,000 crore per day, which amounts to around Rs 3.6 lakh crore a year.

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