IOC, BPCL, HPCL lose Rs 6/litre on diesel

New Delhi: Indian Oil Corporation, BPCL and HPCL on average lost about ₹6 on every litre of diesel sold in the retail market in the fourth quarter ended March 31, compared with a ₹5.50 profit a year earlier, according to brokerage estimates.Petrol margins narrowed sharply to ₹2.90 per litre from ₹8.50 a year ago, according to ICICI Securities. The squeeze on margins is primarily due to the Iran war, which sent crude oil prices soaring in March even as retail prices of regular petrol and diesel remained static in the domestic market.The fourth-quarter performance of these state-run oil marketing companies (OMCs) was likely weaker, "driven by markedly higher retail fuel losses and a sharp rise in LPG under-recovery, partially offset by resilient gross refining margins (GRMs)", ICICI Securities said.Also Read: Iran cuts direct US contact after Trump threat 130094965 It predicted an 82% year-on-year drop in the combined quarterly profit of Indian Oil, BPCL and HPCL.LPG under-recovery rose by ₹110-120 billion in the fourth quarter, according to the brokerage, which estimates a 30-40% rise in the GRMs of these companies. Indian Oil's GRM is estimated at $10.10/barrel for the fourth quarter, up from $7.90 in the year-earlier period. BPCL's is estimated at $12 against $9.20 and HPCL's at $11.90 vs $8.40.Also Read: Trump delays Iran deadlines repeatedly, but Tuesday ultimatum turns most menacingOMCs are expected to price fuels at refinery gates in line with international fuel benchmarks and then add a marketing margin-typically just a few rupees per litre-when selling at retail pumps. Refining margins at OMCs broadly track global trends.Marketing margins, however, behave differently. When crude prices fall, as they did sharply last year, input costs decline but retail prices remain unchanged, allowing marketing margins to expand. Conversely, when crude prices rise without a corresponding increase in pump prices, as is happening now, these margins come under pressure. With pump prices largely unchanged for nearly four years, crude oil movements have become the key driver of OMCs' profitability.

from Economic Times https://ift.tt/JSHDpT6