Fuel retail becomes profitable for oil marketing companies again

Fuel retail has again become profitable for oil marketing companies as domestic prices remain unchanged as against softening international rates.

Hindustan Petroleum, Bharat Petroleum, and Indian Oil have been estimated to have made an average margin of Rs 1.2 per litre on the retail sale of petrol and diesel in the present quarter thus far, as compared to a loss of Rs 3 per litre incurred in the October-December quarter, as well as a loss of Rs 8.9 per litre in the April-December stretch in 2022, The Economic Times reported.

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Companies are expected to have made a loss of Rs 1.2 per litre on the sale of diesel thus far this quarter. The amount of diesel sold in the nation is nearly two-and-a-half times that of petrol.

The domestic rates of petrol and diesel have not changed for almost a year except for adjustments made due to duty revisions. The gross refining margins (GRM) for oil marketing businesses, apart from the inventory impact and windfall tax, are nearly at $11-13 per barrel for the January-February period. This is $1-2 lesser than it was in the previous quarter, which has come due to softer diesel and jet fuel spreads.

These positive marketing margins will affect the three oil marketing companies differently based on the marketing segment's weight in earnings.