The decline is primarily due to discounts on Russian crude oil, a softening of diesel spreads, and inventory losses, according to the market intelligence firm.
The report notes that stable retail fuel prices amid volatile oil prices will help support overall returns for the industry.
Despite the decrease, the operating profit will still be higher than the USD 9-11 per barrel average over the past decade through fiscal 2024. This will partially support OMCs' substantial capital expenditure (capex) requirements.
An analysis of public sector OMCs rated by CRISIL Ratings, covering 90 per cent of the sector, confirms this trend.
OMCs earn through two main channels: refining and marketing. In refining, they earn a gross refining margin (GRM)--the difference between the value of refined products at the refinery gate (benchmarked to international prices) and the cost of crude oil used in production. In marketing, they earn a margin on petrol, diesel, and other petroleum products sold.
This story is from the October 28, 2024 edition of The Business Guardian.
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This story is from the October 28, 2024 edition of The Business Guardian.
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