Oil Prices May Hover In $75-80/Bbl Range

However, a softening of Gross Refining Margins (GRMs) for Indian public sector oil marketing companies (OMCs) during the first nine months of FY25 to an average of $4.8 per barrel compared to $11.75 a barrel in FY24 and $17 in FY23. This was mainly due to a decline in discounts available on sourcing of Russian crude oil - CareEdge Ratings

New Delhi: Crude oil prices are expected to remain range bound at an average of $75-$80 a barrel over the next 6 months, essentially on the back of higher overall global crude oil production aided by increase in crude oil production by the US, while demand growth is expected to remain relatively subdued in the backdrop of a slowdown in major global economies, according to a CareEdge Ratings report. The higher thrust towards Electric Vehicles (EVs) and alternative fuels is also expected to dampen demand for oil. Brent crude oil price on Wednesday (Feb 26, 2025) was trading 0.21 per cent lower at $72.87/bbl on NYMEX.

The report points out that the decline in crude oil prices would result in improved retail margins of oil marketing companies such as Indian Oil, Bharat Petroleum and Hindustan Petroleum which are expected to be in the range of Rs7-9 per litre.

The higher retail margins of oil marketing companies are expected to offset the impact of reduced gross refining margins whereby integrated players having a presence in both refining and fuel retailing businesses are expected to be better-off compared to standalone refiners.

CareEdge Ratings observed a softening of Gross Refining Margins (GRMs) for Indian public sector oil marketing companies (OMCs) during the first nine months of FY25 to an average of $4.8 per barrel compared to $11.75 a barrel in FY24 and $17 in FY23. This was mainly due to a decline in discounts available on sourcing of Russian crude oil along with the reduction in product cracks especially diesel which had previously gone up sharply in the aftermath of the Russia-Ukraine war.

Going forward, CareEdge Ratings expects GRMs of Indian PSU OMCs to remain in the range of $4-$6/bbl in the next 6 months.