OMC Refining Margins Hit as Russian Discounts Shrink

Public sector oil marketers' margins have dropped over 50% year-on-year, PPAC data shows

- Rituraj Baruah

Gross refining margins (GRM) of oil marketing companies (OMC) in India are likely to continue to narrow in the ongoing fourth quarter of fiscal year 2025 (FY25) with declining discounts on Russian oil and shrinking crack spreads.

The benchmark Singapore GRMs in the January-March quarter as of February-end stood at $2.7 per barrel, compared with $4 per barrel in the fourth of the previous fiscal, showed data from ICRA Ltd. During the third quarter of FY25, the benchmark Singapore GRM was at $5 per barrel.

"Refining margins have been lower due to declining discounts on Russian crude, which currently stand around $2.5-2.8 per barrel, along with the fall in crack spreads for all products, other than naphtha. This quarter also, margins may remain soft as crack spreads continue to be subdued. Further, in the previous quarter due to higher winter demand globally, both crack spreads and margins were stronger. They usually tend to ease in January," said Prashant Vasisht, senior vice president and co-group head, corporate ratings, ICRA.