Sethi told ET Now that the gains will primarily be driven by significantly improved marketing margins supported by softer crude oil prices, even as refining margins moderate slightly.
Marketing margins double as crude falls
OMCs derive earnings from two streams—refining and marketing.
With Brent crude expected to average $65–67 per barrel this fiscal, down from $79 last year, marketing margins are poised to jump to $14 per barrel, compared to just $6 per barrel previously.
This alone forms the bulk of the profitability expansion.
Refining margins slip but stay healthy
Refining margins—or gross refining margins (GRMs)—are expected to average $4–6 per barrel, slightly lower than last fiscal’s $5.7, reflecting weaker global demand and the broader shift toward green energy.Combined, the $14 marketing margin and $4–6 refining margin imply total earnings of $18–20 per barrel, versus $12 per barrel last year—a rise of over 50%.
Global oil prices likely to fall further
Sethi said geopolitical risks continue, but the overall trend points to softer crude prices. With steady non-OPEC supply, strong global inventories and muted demand, crude is more likely to decline than rise, despite brief volatility related to Ukraine conflict developments.
Fuel prices in India unlikely to drop
Despite softer crude, retail fuel prices are expected to remain unchanged this fiscal. Sethi said neither an excise cut nor VAT reduction is likely soon, as policymakers remain cautious amid global uncertainties.
Recent GST cuts on non-fuel items help consumer sentiment, but fuel-specific tax cuts are not on the table for now.