Home / Business and Economy / Oil Tops $100: Retail Fuel Margins Plunge to New Losses
Oil Tops $100: Retail Fuel Margins Plunge to New Losses
18 Sep
Summary
- Retail fuel margins are projected to hit a loss of ₹7.4/litre for petrol.
- Diesel marketing margins in September are expected to lose ₹10.3 per litre.
- Strong refining margins are currently cushioning oil marketing companies.
Oil prices have surpassed the $100 per barrel mark this month, with Brent crude reaching approximately $107, fueled by fears of supply disruptions stemming from US-Iran clashes. Consequently, retail fuel marketing margins are projected to register a deficit in September. Estimates suggest a loss of ₹7.4 per litre for petrol and ₹10.3 per litre for diesel.
Despite these anticipated September losses, the financial performance of oil marketing companies (OMCs) for the current quarter is expected to remain supported by the positive margins recorded in the first two months. The previous quarter, June, was challenging due to elevated crude oil and freight costs.
However, the situation improved significantly in the September quarter as crude prices fell to around $68 per barrel in early July when tensions in West Asia eased. This price drop, coupled with the full impact of auto-fuel price adjustments in May, is expected to bolster OMC marketing margins.
Moreover, robust refining margins are acting as a vital cushion against the decline in retail fuel margins. Singapore Gross Refining Margins (GRM) averaged $24.5 per barrel from April to August, substantially exceeding the long-term average. This strong refining performance helps offset the compressed GRMs that arise when retail prices do not immediately adjust to rising crude oil costs.
