Improved prospects, attractive valuation for OMCs

Brent has dipped to $65 per barrel due to the tariff war and OPEC+ deciding to raise output.

- DEVANGSHU DATTA

Blended global gross refining margins (GRMs) may recover to the range of $5-6 per barrel over the next few months, driven by 1 million barrels per day (bpd) of permanent refining capacity shutdown, lower Chinese product exports, and continuing Russian price discounts as OPEC+ hikes output by up to 2.2 million bpd. The tariff fallout is hard to estimate.

Sustained demand weakness could accelerate permanent capacity shutdowns even as new capacity ramp-up slows. Tariffs may also hit US refining, given the cost of medium-heavy crudes the US imports.

The Government of India (GoI) has hiked petrol and diesel excise duties by ₹2 per litre each, and increased domestic LPG by ₹50 per cylinder. The petroleum ministry has also assured compensation for LPG under-recoveries amounting to ₹41,340 crore in the financial year 2024-25 (FY25).

Minister Hardeep Singh Puri said oil marketing companies (OMCs) have decided to not increase retail prices of petrol and diesel, after the excise duty hike.