While weak GRMs will hurt oil marketing companies (OMCs), high retail and marketing margins will offset that impact.
Going forward, if these trends persist, OMCs could see strong profits. One potential issue may be government intervention to reduce retail prices ahead of the Maharashtra state election.
While this would restrict profits if crude prices stay down, it would lead to losses for OMCs if crude bounces back. While benchmark Brent dropped below $70/bbl, the Singapore GRM fell to $2/bbl from an average of $6/bbl in 2024 till date. The decline was due to fall in petrol and diesel refining margins, which fell from averages of $15/bbl and $19/bbl to below $10/bbl. Brent was earlier estimated to average $84/bbl in FY25, but demand weakness and possible production increases from OPEC-plus (after December 2024) could keep prices down.
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