India, the world’s third largest oil importing and consuming nation, is prone to save as a lot as Rs 1.8 lakh crore on import of crude oil and LNG if the development of softening worldwide vitality charges continues, Icra stated Wednesday.
India, which meets over 85% of its crude oil wants by way of imports, spent $242.4 billion on shopping for crude from abroad within the fiscal 12 months ended March 31, 2025. With home manufacturing assembly roughly half of the demand, it additionally spent $15.2 billion on import of liquefied pure gasoline within the fiscal.
Oil costs in worldwide markets fell to over four-year low of $60.23 per barrel earlier this week on fears of rising international provide at a time when demand outlook is unsure. Brent crude and US West Texas Intermediate crude, which fell to their lowest since February 2021, have since risen to $62.4 on indicators of extra Europe and China demand and fewer US output. Nonetheless the charges are $20 per barrel decrease than March 2024 when petrol and diesel costs have been reduce by Rs 2 per litre every forward of basic elections.
“Icra expects common crude costs for fiscal 2025-26 (April 2025 to March 2026 fiscal 12 months) to stay within the $60-70 per barrel vary,” the ranking company stated in a notice.
At these ranges, earnings of upstream firms is estimated at Rs 25,000 crore for fiscal 2025-26. Upstream firms are ones that produce crude oil.
“Nevertheless, there can be financial savings of Rs 1.8 lakh crore for crude imports and Rs 6,000 crore for LNG imports,” it stated.
For gas retailers, the advertising margins on auto-fuels will stay wholesome, whereas LPG under-recoveries are prone to scale back, Icra stated.
Uncertainty associated to international tariffs and their influence on development, coupled with an announcement by OPEC+ to steadily withdraw their manufacturing cuts, beginning with 411,000 barrels per day addition from Might 2025 and one other 411,000 bpd from June 2025, have resulted in oil costs declining from about $77 a barrel as on March 31 to about $60-62.
Stating that India meets a big portion of its home crude oil necessities by way of imports, Icra stated within the state of affairs the place crude stays in $60-70 a barrel vary, the revenue earlier than tax for upstream gamers in FY2026 is anticipated to be decrease by Rs 25,000 crore. Despite this, Icra foresees the capex plans of home upstream gamers to stay intact.
Advertising margins on auto fuels for oil advertising firms would stay above long run common of Rs 2.5-4 a litre and underneath recoveries on LPG are anticipated to scale back with decline in crude costs.
Whereas petrol and diesel costs are deregulated, the federal government controls cooking gasoline LPG costs. OMCs promote the gas at means under price and are compensated for the under-recovery by means of subsidy from the federal government.
Decrease LPG under-recovery and compensation by the federal government would assist profitability of downstream firms, regardless of the rise in excise responsibility on auto fuels by Rs 2 a litre with impact from April 8, 2025.
Nevertheless, there can be stock losses for refiners owing to the sharp decline in crude costs. Furthermore, additional hikes in excise responsibility cannot be dominated out.
Icra stated the pricing for Administered Value Mechanism gasoline and LNG imported from Qatar are linked to crude oil costs. “Decline in crude costs will result in a moderation in gasoline costs, which may translate to important financial savings on time period LNG imports. If crude oil costs maintain between $60-70 per barrel, Icra initiatives the financial savings in Qatar LNG imports at Rs 6,000 crore in FY2026 vis-à-vis FY2025,” the notice added.
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