Rising crude oil prices may impact margins of oil marketing companies: ICRA

| | New Delhi
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Rising crude oil prices may impact margins of oil marketing companies: ICRA

Thursday, 03 June 2021 | PTI | New Delhi

The surge in international crude oil price could have a mixed impact on oil public sector companies, and an improvement in the refining margins is expected due to increasing demand, but marketing margins may be compressed, ICRA said Wednesday.

 “Unless the Centre and state governments cut the excise and VAT (value-added tax) rates, public sector oil marketing companies would be constrained in passing on further price hikes in the retail market,” it said in a note.

 Oil prices have hit a two-year-high level with Brent breaching the USD 70 per barrel mark, owing to vaccination-led optimism on fuel demand as the summer driving season of the US commences.

 Additionally, inventory levels have been lower than their 5 years’ averages even as OPEC+ reaffirmed its current plan to gradually increase production in July by 8,40,000 barrels a day.

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