Business

India’s Petroleum Demand Set To Grow, But Oil Companies Face Margin Pressure, Fitch Says

India’s petroleum product demand is expected to rise by 3% to 4% in the financial year ending March 2025 (FY25), driven by increased consumer, industrial, and infrastructure activity, according to a report from Fitch Ratings. This growth projection aligns with the agency’s forecast of a 6.4% GDP growth for the same period.

The demand boost will primarily be fueled by higher consumption of diesel and petrol, which together constitute a large portion of the country’s petroleum product usage. The first seven months of FY25 have already seen a 3% rise in consumption, following a 5% growth in FY24.

Also Read: UPI Sets Record With Surge In Transactions In December 2024

However, while demand growth remains strong, Indian oil marketing companies (OMCs) are likely to face challenges in refining margins. Fitch forecasts a decline in these margins, which are expected to fall below mid-cycle levels in FY25. This is due to a combination of regional oversupply, lower product cracks, and diminishing benefits from price differences between various crude oil types.

Despite these difficulties in refining, the outlook for marketing margins remains more positive. The report notes that the drop in Brent crude oil prices, compared to FY24, will support healthy marketing margins, offering some relief to OMCs facing pressure on the refining side.

Refiners without marketing operations, such as HPCL-Mittal Energy Limited (HMEL), are anticipated to experience greater profitability challenges. Without the offset of strong marketing margins, pure refiners are likely to struggle more. However, Fitch projects that HMEL’s financial outlook will improve in FY26 as refining margins recover to mid-cycle levels, driven by a reduction in regional oversupply and continued decline in Brent crude prices.

The report underscores the crucial balance between refining and marketing for Indian OMCs, suggesting that robust marketing performance will help mitigate some of the downside risks associated with lower refining margins in the near term.

Shibra Arshad

Recent Posts

Gautam Adani Hails Puri Lifeguards As Unsung Heroes During Rath Yatra Visit

Gautam Adani, Chairman of the Adani Group, visited Puri in Odisha during the annual Rath…

1 hour ago

Acharya Pramod Krishnam Slams Congress Over ‘Internal Emergency’ Allegation

Acharya Pramod Krishnam, stirred political debate by claiming an 'internal emergency' still exists within the…

2 hours ago

MRM Meeting: Pledge for Global Peace, Green India, De-addiction & Democratic Integrity

Taking a crucial step toward positive transformation, social reform, and global peace, the Muslim Rashtriya…

2 hours ago

India To Host 2029 World Police & Fire Games; Amit Shah Hails Global Recognition

India has been chosen to host the prestigious 2029 World Police and Fire Games in…

2 hours ago

Seeing The Lord Among Devotees Is The Pinnacle Of Humility: Gautam Adani At Rath Yatra

Gautam Adani, along with his wife and Karan, participated in the Rath Yatra in Puri,…

4 hours ago

PM Modi Interacts With Group Captain Shubhanshu Shukla Aboard The ISS

PM Narendra Modi interacted with Group Captain Shubhanshu Shukla, the first Indian to reach the…

6 hours ago