From mint · A Ksheerasagar · · 1m 50s
Crude oil prices above $100 a barrel
HPCL, IOCL and BPCL face earnings pressure as crude prices hit $107.
In brief
HPCL, IOCL and BPCL face earnings pressure as crude prices hit $107. Elevated crude oil prices above $100 per barrel threaten margins for Indian state-run oil marketers if retail fuel prices remain unchanged. Originally reported by mint.
Crude oil prices above $100 a barrel
Crude prices above $100 a barrel could squeeze Indian state-run oil marketers’ margins if petrol and diesel prices remain unchanged.
HPCL faces greatest earnings pressure
HPCL faces the greatest earnings pressure, followed by IOC and BPCL.
Analyst warns of margin squeeze
Dhaval Popat, Analyst, Energy at Choice Institutional Equities, said state-owned oil marketing companies remain the most vulnerable to crude oil prices sustaining above $100 per barrel.
Earnings risk explained
Popat expects HPCL to face the highest earnings pressure, followed by IOCL and BPCL, as elevated crude prices compress marketing margins.
CGD companies at risk
City gas distribution companies, including IGL, MGL, Gujarat Gas, and Adani Total Gas, could face margin pressure if higher gas procurement costs cannot be passed on to consumers.
GAIL and Petronet exposed
GAIL and Petronet LNG remain exposed to potential volume weakness and gas-sourcing risks, although their regulated or contracted businesses provide some insulation.
Key earnings risk
The key earnings risk is not crude oil prices remaining above $100 per barrel alone, but the inability of companies to pass higher input costs on to end consumers.
Brent crude rebounds
Brent crude rebounded towards $107 a barrel as supply risks remained in focus.
Houthi strike impact
A Houthi strike caused a limited fire at an Aramco office building in Dhahran, adding to concerns over risks to regional energy infrastructure.
Saudi pipeline expansion
Saudi Arabia plans to increase the capacity of its East-West pipeline to 10 million barrels per day over the next two to three years.
What to remember
Elevated crude oil prices above $100 per barrel threaten margins for Indian state-run oil marketers if retail fuel prices remain unchanged.
