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Middle East War Hits Indian Fuel Retailers: OMCs Losing Up to Rs 30 per Litre on Sales, Says Report
Sentiment: NeutralHigh Priority
What Happened?
Indian oil marketing companies (OMCs) are facing significant losses due to rising crude procurement and shipping costs amid the Middle East conflict. A report estimates losses of Rs 26 per litre on petrol and Rs 30 on diesel.
Key points
- Jefferies estimates marketing losses of Rs 26 per litre on petrol and Rs 30 on diesel.
- Procurement costs for OMCs are similar to an Indian crude basket price of $125 per barrel.
- Freight costs have surged eightfold since the conflict began, now comprising over 25% of the landed cost.
- Oil flows from the Middle East have fallen to around 75% of pre-war levels, excluding Iran.
- Refining margins remain elevated, but higher crude procurement costs are impacting marketing margins.
Key insights
- Continued disruptions in Middle Eastern oil supplies may keep marketing margins under pressure.
- The rising freight costs could lead to further increases in fuel prices for consumers.
- If the conflict persists, OMCs may need to adjust their pricing strategies to mitigate losses.
Why it matters
The losses faced by OMCs could lead to higher fuel prices for consumers in India.
Source
Times of India
