Falling Oil Prices Boost OMC Profitability

Global crude oil prices are declining, which is expected to improve the profitability of public sector Oil Marketing Companies (OMCs), according to a report by JPMorgan Chase. Refining margins for companies that convert crude oil into petrol and diesel have surpassed pre-West Asia tension levels. Additionally, reductions in central excise duties are supporting these companies. However, rising debt levels and uncertainty around fuel taxes could limit long-term earnings growth for the sector.

Despite the surge in crude prices due to West Asia tensions, domestic retail fuel prices were not significantly increased. Although petrol and diesel prices rose by ₹7.50 per litre in May, they remained below actual costs. With crude oil now falling close to $80 per barrel, OMC profitability is improving beyond pre-conflict levels. Losses on LPG remain high but are expected to ease soon. While the April–June quarter of FY 2026–27 may see some pressure, profitability is likely to improve in the July–September quarter. Among major PSU OMCs, Bharat Petroleum Corporation Limited and Indian Oil Corporation are expected to benefit the most, followed by Hindustan Petroleum Corporation Limited.