Crude shock to hit oil companies' margins, but refining gains could save Q2 show
Oil breached $100 a barrel this month with Brent crude at around $107 as US-Iran clashes stoked supply fears. Retail fuel marketing margins are expected to turn into a loss of ₹7.4 per litre for petrol and ₹10.3 per litre for diesel in September. However, it is unlikely to erase improvement seen during the first two months of the quarter.
Crude oil prices have surged to exceed $100 a barrel, primarily due to geopolitical tensions between the US and Iran. This increase is expected to negatively impact marketing margins for oil companies in September, with petrol margins dropping to a loss of ₹7.4 per litre and diesel margins falling to a loss of ₹10.3 per litre, according to ICICI Securities estimates.
However, these losses are anticipated to be less severe compared to the losses incurred in the June quarter, when marketing margins were ₹6.1 and ₹18.9 per litre for petrol and diesel, respectively.
The turnaround in the September quarter is largely attributed to a significant fall in crude oil prices to around $68 a barrel in mid-July, as tensions between the two nations eased. This drop in crude prices helped improve auto-fuel marketing margins, which are expected to continue recovering in September thanks to the recent announcement of higher retail fuel prices.
Overall, refining margins remain a crucial buffer against the decline in retail fuel margins, with Singapore Gross Refining Margins averaging $24.5 per barrel during April-August, which is substantially higher than the average of $5.6 per barrel over the past three years.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
