As crude oil prices decline, oil marketing companies (OMCs) are reaping substantial profits from petrol and diesel sales.
A recent report by ICRA highlights that companies such as Indian Oil, Hindustan Petroleum, and Bharat Petroleum are currently making a profit of Rs 15 per litre on petrol and Rs 12 per litre on diesel.
“ICRA estimates that OMCs’ net realization was higher by Rs 15 per litre for petrol and Rs 12 per litre for diesel compared to international product prices in September 2024 (up to September 17). The retail selling prices of these fuels have remained unchanged since March 2024, following a Rs 2 per litre reduction on March 15, 2024,” explains Girishkumar Kadam, Senior Vice President and Group Head – Corporate Ratings at ICRA.
The marketing margins for OMCs have seen significant improvement due to the recent drop in crude prices, a sentiment echoed in the ICRA report.
“The marketing margins on retail sales of auto fuels for Indian OMCs have increased in recent weeks with the decrease in crude prices,” states ICRA.
Experts believe that with such substantial marketing margins, OMCs have ample opportunity to pass on some of these profits to consumers by lowering petrol and diesel prices.
Earlier, the Ministry of Petroleum and Natural Gas recognized that state-owned OMCs had an exceptionally profitable financial year in 2023-24.
The ministry reported that the combined profit of OMCs for FY 2023-24 reached Rs 86,000 crore, which is over 25 times higher than the challenges faced in the previous fiscal year.
For the full fiscal year 2023-24, Hindustan Petroleum Corporation Limited (HPCL) achieved a record net profit of Rs 16,014 crore, bouncing back from a loss of Rs 6,980 crore the previous year.
Indian Oil Corporation Limited (IOCL) concluded a strong year, posting its best ever refinery throughput, sales volume, and net profit.
Bharat Petroleum Corporation Limited (BPCL) reported a profit after tax of Rs 26,673 crore for FY 2023-24, nearly 13 times greater than the prior year.
Furthermore, BPCL’s planned capital investment of Rs 1.7 lakh crores over five years under ‘Project Aspire’ demonstrates its commitment to delivering long-term value for shareholders.
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