Industry Odisha Bureau, Sep 18: A fresh crude shock is squeezing oil companies’ fuel marketing margins. Brent crude has climbed to around $107 per barrel. The surge follows renewed supply concerns linked to US-Iran tensions. September could therefore become a difficult month for oil companies.
Marketing Margin Turns Negative
Petrol marketing margin may fall to negative ₹7.4 per litre. Diesel margin could decline to negative ₹10.3 per litre. Higher crude prices are driving the sharp deterioration. Retail fuel prices have not moved equally with global oil costs. That mismatch is hurting marketing profitability.
Earlier Gains Offer Support
The crude shock may not erase gains from July and August. Oil prices had fallen sharply during early July. Brent dropped near $68 per barrel during that period. That helped oil companies rebuild marketing margin. Higher retail fuel prices also supported earnings.
Refining Gain Becomes Key Cushion
Strong refining gain remains the biggest support for Q2 earnings. Singapore refining margins averaged $24.5 per barrel during April-August. That was far above the recent historical average. Higher refining gain can offset weaker fuel marketing margin. This balance could protect oil companies from deeper quarterly losses.
Q2 Outlook Still Improves Sequentially
Petrol margin may average around ₹2.9 per litre this quarter. Diesel margin could average close to ₹1.3 per litre. Both figures are better than June-quarter levels. Oil companies had suffered steep marketing losses earlier. The latest quarter therefore still shows sequential improvement.
Crude Shock Raises Fresh Risk
A prolonged crude shock could change that outlook quickly. Higher feedstock costs raise working-capital requirements. They also pressure refining economics when product prices adjust slowly. Oil companies therefore remain highly exposed to crude volatility.
Refining Gain Could Save the Quarter
Refining gain may decide the final Q2 earnings outcome. Strong processing margins provide an important buffer. They can partly absorb negative marketing margin. Indian Oil, BPCL, and HPCL all faced June-quarter losses. Better refining economics could improve their September-quarter performance.
Oil Companies Face Delicate Balance
The next few weeks will remain critical for oil companies. Crude shock pressure is rising. Marketing margin has weakened sharply. Refining gain remains supportive. If crude stays above $100, the cushion could narrow. For now, refining strength may protect the Q2 earnings recovery.
