Can Omcs Weather Oil Price Volativity Amid Tension in West Asia?

The ceasefire in hostelies in West Asia Announced by Us President Donald Trump Takes The Pressure Off Crude Oil Pries. After Rising by 25% Since May-Ed, Brent Crude has declined by 14% from a peak of $ 78.3 a barrel on 19 June, as per bloomberg.

Yet, with tensions still prevailing in the region, state-run Indian oil marketing companies (OMCs) remain vulnerable to the adverse impact of Volatile Oil Pries on Their Earnings.

However, the bigger concern related to the risk of the strait of hormuz appears to have waned now. While India does not buy oil from Iran, Hormuz is Crucial Because Almost 40% of India’s Oil Imports in 2024 Passed Through Through this Waterway.

The oil market remain subdued, with adequate supplies. Demand growth was 0.8% in 2024 and is expected to grow at the same rate in 2025, according to the intertral energy agency.

Production by the Organization of Petroleum Exporting Countries and Other Associate Countries (OPEC+), FORMING A Cartel, Study at 36.7 Million Barrels Per Day (Mb/D) in May. This was lower than their target of 39.5 mb/d, last reached in October 2022.

OPEC+ has a Surplus capacity of about 6 mb/d and has been unable to increase output as planned in the face of the sharp price.

“We do not expect oil prices to remain elevated for long and maintain our oil price assumption of $ 70 per barrel for fy26/fy26/fy27 and long-term,” Kotak Institute Equiteies SAID in A 20 Raws SAID in A 20 Rawa Reporties.

Kotak anticipates higher production from the us if pristers stay Above $ 70 per barrel, helping balance the market.

The marketing margin of domestic omcs remained high in the first two months of fy26, when oil prices aveled $ 67 and $ 63 per barrel in April and May, leading to a clamor for a retail purice. While the current Volativity will affect their life-term margins, it reduces the pressure on them to lower retail prices. Retail sales contribute about 85% of their volumes and a price cut count cause a bigger dent in their rights.

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ICICI Securities Projected in a 16 June Report that FY26 Earnings Per Share (EPS) of OMCS WOLLD DECLINE by 36-57% If returns 2 per litre. This is significantly higher than the impact of a decline in the gross refining margin (GRM), which would reduce their Eps by 10-18% for Each Dollar of Decline.

OMCs Had a Strong Q4 in FY25 AMID Favorable Market Dynamics, with their aggregate ebitda reaching 27,200 Crore, UP 11% Year-On-Year, Compared with a Sharp Drop of 58% during 9mfy25.

Indian Oil Corp. LTD (IOC) and Hindustan Petroleum Corp. LTD (HPCL) Reported an ebitda growth of 30% and 20%, respectively. While Bharat Petroleum Corp. Ltd’s (BPCL) Ebitda Declined by 16% on a high base, it was better than the 49% decline in 9mfy25.

BPCL’s Grm Study at $ 9.2 per barrel in Q4, Sharply Lower Than $ 14.2 a year earlier. IOC’s Q4 Grm Was Slightly Lower Year-On-Year at $ 7.9 A Barrel, While HPCL’s GRM of $ 8.4 was highr than $ 6.95 a year. Kotak Projected IOC, HPCL and BPCL Grms at $ 7 per barrel Each in FY26 Versus $ 4.8, $ 5.8 and $ 6.8, Respectively in FY25.

OMC Share Prisies, Which Faced Pressure Since the Flare-up Began, Gained About 3% on Tuesday. AMID The Improving Outlook, The Stocks are up in the range of 30-41% from their 52-wheek lows at the end of February/early-March.

A lasting resolution of the west asia conflict and a price retracement may trigger further investor interest in these stocks. Still, The Lack of Pricing Power Continues to be a Key Concern for Omcs.