New Delhi, Feb 6 : Crude oil prices are anticipated to remain within a range of $75 to $80 per barrel over the next six months, driven by increased global production, particularly from the United States. Meanwhile, demand growth is expected to be moderate due to the ongoing economic slowdown in major global markets, according to a report released by CareEdge Ratings on Thursday.
The report highlights that the push towards Electric Vehicles (EVs) and alternative fuels will further dampen oil demand, contributing to the stability in crude prices. As a result, retail margins for India’s oil marketing companies (OMCs) such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) are set to improve, likely ranging between ₹7 and ₹9 per litre.
Higher retail margins are expected to offset the impact of declining gross refining margins (GRMs). Integrated companies with operations in both refining and fuel retailing are expected to fare better than standalone refiners.
CareEdge Ratings observed that during the first nine months of FY25, GRMs for India’s public sector OMCs averaged $4.8 per barrel, a significant drop from $11.75 per barrel in FY24 and $17 per barrel in FY23. The decline is attributed to shrinking discounts on Russian crude oil and lower product cracks—especially for diesel—which had surged following the Russia-Ukraine conflict.
Looking ahead, the report forecasts that GRMs for Indian public sector OMCs will remain in the $4 to $6 per barrel range over the next six months. However, the decline in refining margins is expected to be counterbalanced by robust retail earnings.
“Integrated players involved in both refining and fuel retailing are likely to perform better compared to standalone refiners,” said Hardik Shah, director at CareEdge Ratings. “Additionally, strong retail margins in the domestic market are prompting Indian companies to expand their retail networks rather than prioritizing exports, which had been more attractive during FY23.”
Retail margins on petrol and diesel saw a significant increase in the third quarter of FY25, reaching around ₹9 per litre due to falling crude oil prices and softened GRMs. With crude prices projected to remain stable and GRMs likely to stay within a defined range, CareEdge Ratings expects blended retail margins to hold steady at ₹7 to ₹9 per litre in the coming months. This stable outlook provides room for potential rationalization of retail fuel prices, which have remained largely unchanged for a prolonged period.( With inputs from IANS)