Ravichandran said the spike in crude oil prices would lead to increase in the working capital requirements and short-term debt levels of oil marketing companies, thereby negatively impacting their profitability.3 per barrel in August-end.3 per barrel in August-end.Icra said over the medium term, the global refinery capacity additions are expected to exceed the demand growth owing to which refinery margins are expected to weaken, albeit the near term outlook is positive due to disruptions in refining markets.
Apart from brownfield expansion/debottlenecking projects, the new investments in the sector are still in the initial stages, it added."Higher crude oil prices would also test the Government China thread screw barrel resolve to keep prices of auto-fuels at market-determined levels, which would have material implications for private marketers," he said.This would lead to gross under-recoveries on sensitive products climbing to Rs 22,000-25,000 crore in the current fiscal from earlier estimate of Rs 16,000-20,000 crore, Icra said in a statement.Every USD per # barrel increase in Indian basket crude price pushes up under-recoveries -- which is the revenue loss arising from selling products below cost, by about Rs 1000 crore and net import bill by USD 1.
Due to steady rise in retail prices of petroleum products and escalating competition from the private fuel retailers, the oil marketing companies could face pressure on their marketing margins, it said.Over the past three months, crude oil prices have increased by about 28 per cent from USD 52.Brent prices have jumped 40 per cent to around USD 67 per barrel this month from USD 48 in November 2016 when the OPEC had decided to cut back on crude oil production.Besides, higher petroleum product prices following spike in crude oil prices are expected to modestly impact the demand growth of petroleum products.2 billion. New Delhi: With oil prices on the boil, the government will be under pressure to cut excise duty on petrol and diesel to help soften the impact on consumers, credit rating agency Icra said on Friday.The increase is being attributed to geo-political tensions, extension of timeline for production cutback by OPEC and few non-OPEC countries, higher-than-anticipated global demand growth of petroleum products and some supply disruptions.