India Energy Sector Outlook: Oil marketing companies (OMCs) are set for a rapid comeback and their operating profit is expected to increase by more than 50 percent to $ 18 to $ 20 per barrel in the current financial year 2025-26. Rating agency Crisil Ratings said on Friday that this profit will be driven by strong marketing margins amid stable retail fuel prices and favorable crude oil dynamics.
CRISIL Ratings statement
Oil marketing companies earn income from refining (Gross Refining Margin or GRM) and marketing of petrol, diesel and other fuels. “The improvement in marketing margins in the current financial year will more than offset the decline in refining margins due to slow growth in global demand for fossil fuels as the world moves towards cleaner energy sources,” CRISIL Ratings said in a statement. ”With better profits, cash reserves will increase to Rs 75,000-80,000 crore, whereas in the last financial year 2024-25 it was around Rs 55,000 crore.
Strong cash flows will support the sector’s planned capital expenditure of Rs 90,000 crore, mainly focused on expansion of legacy projects and domestic demand-driven projects. Crude oil prices are expected to fall to $65-67 per barrel. Due to which the gross revenue (GRM) will be limited to four to six dollars per barrel. On the contrary, marketing profits are expected to increase to around US$14 per barrel (about Rs. 8 per litre).
What could be the price of crude oil?
Which will increase the overall operating margin. In the last five financial years, geopolitical uncertainties have affected oil prices while retail fuel prices have remained in a tight range. Anuj Sethi, senior director, CRISIL Ratings, said, “Despite crude oil prices being volatile in the current financial year, there is a possibility of softening to $ 65-67 per barrel. GRM is likely to remain at $4-6 per barrel due to pressure on refining spreads due to softening global demand and energy transition trends.
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