NEW DELHI: As crude oil prices hurtle towards the sub-$70 level due to the ongoing banking crisis in the US and Europe, Indian oil marketing companies (OMCs) stand to gain from the latest fall. According to industry experts, upstream oil producers’ realisation would decline but oil marketing companies such as IOCL, BPCL and HPCL will reap the benefits.
“The impact is negative for oil producers, whose realisations would decline. OMCs would benefit from improvement in marketing profits. In case the low prices sustain, the gas utilities sector would also see reduced prices of long-term LNG, which should increase demand,” said Prashant Vashisht, vice-president of Corporate Ratings, ICRA.
After the SVB fiasco, Brent Crude sank to its lowest level since January 2023 and WTI dipped to its lowest since December 2022. Benchmark Brent Crude futures, which were trading above $80 a barrel a week ago, are now trading at $71 a barrel (19.30 PM IST) on Thursday.
Anuj Gupta, VP-Research at IIFL Securities, expects the crude to go down further and could test $65 to $70 levels very soon. “Due to less demand from China, negativity in the system and Moody’s downgrading the sector, crude prices have come down about 5%,” said Gupta. Currently, India imports more than 85% of its crude oil requirements from all over the world.