Demand For Petroleum Products To Rise By 4%

New Delhi: India’s demand for petroleum products such as petrol, diesel and LPG is expected to rise by three to four per cent in the current financial year ending on March 31, 2025, according to a Fitch Ratings report.

The growth is driven by rising consumer, industrial and infrastructure demand, the rating agency said in the report. For India’s oil marketing companies (OMCs), refinery margins are expected to fall below their mid-cycle levels in FY25 amid lower product cracks, regional oversupply, and lower benefits from price differences between crude varieties, the report states. However, marketing margins would be better than FY 24 due to lower Brent crude oil prices in the current financial year, the report states.

“This will mitigate the pressures from lower refining margins for the oil marketing companies, although pure refiners like HPCL-Mittal Energy Limited’s (HMEL, BB+/Stable) will face greater pressure on profitability.

We expect refining margins to recover to their mid-cycle levels in FY26, as the regional oversupply eases and Brent crude oil prices fall in line with Fitch’s assumption, while we project marketing margins to remain supportive. HMEL’s low rating headroom in FY25 will improve in FY26 due to a gradual normalisation in refining margins,” the report said.