India’s state-owned oil retailers haven’t raised car fuel prices for nearly a month, despite rising oil prices, putting pressure on margins.
The price linked to the international tariff basket was last changed on December 7th, when gasoline and diesel cost 30 and 26 paisas respectively. Since then, in Delhi, the prices have been Rs 83.71 and Rs 73.87 per liter, respectively.
However, crude oil continued to rise. Brent rose 6.3% and India’s crude oil basket rose 5.1% between December 7th and January 1st. The main reason The incompetence of oil marketers puts pressure on their margins, as India’s high retail prices are central and state taxes, which account for more than half of pump prices.
According to a report by ICICI Securities, the net marketing margin for January could be less than 1 liter per liter. To keep the January margin above 2 rupees per liter, retail prices need to be raised by 2 rupees per liter.
Nirmal Bang reports that crude oil above $ 55-60 a barrel can make it difficult for companies to give it to consumers, which could pose a risk of fueling retailers. there is. This is because high excise taxes and rising prices make fuel costs even higher for consumers.
However, Kotaku Securities said the rise in total refining margins due to higher oil prices could help offset some of the impact on marketing margins.
In an email reply to Bloomberg Quint, Rusmic Oza, Head of Basic Research at Kotaku Securities, said, “We are positive about OMC because of its attractive valuations and high potential for revenue growth.” ..
Increasing inventories of low-priced crude oil can also help fuel retailers cushion.
The usage level of the refinery is Fuel remains low From a year ago. According to Emkay’s report, Indian Oil Corp. had an uptime of over 100%, but Bharat Petroleum Corp. in November. And Hindustan Petroleum Corp.’s Mumbai plant accounted for 126% and 99%.
According to ICICI Securities, an increase in surplus and sluggish consumption could lead to higher inventory levels.
Suspension of retail fuel price hikes to squeeze oil companies’ marketing margins
https://www.bloombergquint.com/business/pause-in-retail-fuel-price-hikes-to-crimp-marketing-margins-of-oil-firms Suspension of retail fuel price hikes to squeeze oil companies’ marketing margins