New Delhi: Reliance Industries Ltd. has reportedly begun capping fuel sales at select outlets operated under its joint venture with BP Plc, as supply concerns persist amid disruptions linked to the Iran conflict.

According to a report by Hindustan Times, citing people familiar with the matter, individual fuel purchases at Jio-BP petrol pumps have been limited to ₹1,000 per visit. While the company has not issued an official directive, several retail operators have started enforcing the cap to manage surging demand and prevent shortages.

Reliance operates over 2,000 fuel stations through the joint venture. Despite its relatively small share, it is among the first retailers to move beyond price hikes and introduce rationing measures.

The move comes as India, the world’s third-largest oil consumer, continues to face supply pressures due to disruptions in the Strait of Hormuz, a key corridor for global shipments of crude oil, petroleum products and natural gas. Although a tentative ceasefire between the United States and Iran is in place, tanker movement remains affected, with insurers still classifying the region as high-risk.

Responding to the developments, a spokesperson for Reliance Industries told HT that there is no formal company-wide policy limiting fuel purchases. However, the spokesperson acknowledged that such instances could be the result of a “localised” situation.

The government last month imposed a Special Additional Excise Duty (SAED) on exports of diesel and aviation turbine fuel (ATF), as part of efforts to curb windfall gains by refiners and boost domestic fuel availability amid tight global markets.

Alongside, refining margins have been capped at USD 15 per barrel, with any earnings above that threshold treated as a discount on fuel sold to state-run marketing companies, effectively transferring excess gains to offset retail losses, sources said.

The oil marketing companies (OMCs) on March 26 fixed rates for petroleum products that are at a discount of up to Rs 60 per litre to their imported cost. OMCs have decided to fix a discount on the refinery transfer price (RTP) - the internal price at which refineries sell fuel to marketing arms - to effectively pay refineries less than the import-parity cost of the fuels like petrol and diesel.

For the second half of March, a discount of Rs 22,342 per kilolitre (Rs 22.34 per litre) was fixed on diesel to bring down the RTP of Rs 85,349 per kl to Rs 63,007 per kl.

For the first fortnight of April, the discount on diesel has been fixed at Rs 60,239 per kl to lower RTP from Rs 146,243 per kl to Rs 86,004 per kl. On ATF, the RTP has been slashed to Rs 76,923 per kl from Rs 127,486 per kl after considering a discount of Rs 50,564 per kl.

The RTP for kerosene after a discount of Rs 46,311 per kl has been fixed at Rs 77,534 per kl from Rs 123,845 per kl, they said.

Traditionally, petrol and diesel in India have been priced on an import parity basis, meaning the fuels are valued as if they were imported, even though it is primarily crude oil that is brought into the country and refined locally. Refinery transfers of these products to oil marketing companies were based on import parity price (IPP) until June 2006, after which the government adopted trade parity pricing (TPP) - a benchmark that assigns 80 per cent weight to import parity price and 20 per cent to export parity price.

This pricing protected refinery margins, particularly of standalone refiners who didn't have the cushion of marketing margins on petrol and diesel, whose pricing was deregulated by the government in 2010 and 2014, respectively.

Despite being freed, petrol and diesel prices have not exactly moved in line with cost and have been on a freeze since April 2022, with OMCs absorbing losses when crude oil prices rise and making bumper profits when rates fell.

The discount on RTP comes as under-recoveries or losses on petrol and diesel have widened, sources said, adding that unlike cooking gas LPG, the government does not compensate OMCs for losses on auto fuels.