Government-owned Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation are expected to post losses in the second quarter ending September of the current fiscal year 2022-23. This may be the first time ever that state oil marketing companies (OMCs) will post losses for the second quarter in a row.
As per a report from ICICI Securities, the combined quarterly loss of the three companies may total Rs. 21,270 crore. IOC, BPCL and HPCL recorded a combined loss of Rs. 18,480 crore in the first quarter ending June this year.
The brokerage firm commented, “The three oil marketing companies IOC, BPCL and HPCL remain trapped in the quagmire of weak marketing losses and there is not enough traction in refining margins.”
In its report, ICICI Securities forecasted that IOC shall report a loss of Rs. 6,300 crore and BPCL & HPCL shall post losses of Rs. 6,900 crore and Rs. 8,100 crore respectively. During the last six months, retail oil prices have remained largely unchanged as international fuel prices have been volatile.
Oil prices fell from an average of $ 113 per barrel in Q1 to $ 100 per barrel in Q2. During the same period, the decline in gross refining margin (GRM) translated into a double blow to OMCs. For instance, Singapore GRM fell sharply to $ 8.29 per barrel in Q2 from $ 20.93 in Q1.
Oil industry executives maintain a negative outlook on oil prices and margins as the advanced economies battle recession fears. The results of OMCs are expected to come out late this month or early November.
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