Sustained crude oil prices above $100 per barrel could put pressure on oil marketing companies (OMCs), particularly if petrol, diesel and liquefied petroleum gas (LPG) prices remain unchanged, but the extent of the impact will depend on retail-price pass-through, government policies and refining cracks.
“If crude remains above $100 per barrel, with restricted retail-price increases, OMCs could face negative petrol and diesel marketing margins, higher LPG under-recoveries, higher crude-landing, freight and insurance costs, working-capital and debt accumulation and inventory losses if crude subsequently corrects sharply,” said Maulik Patel, head of research, Equirus Securities.
He added that among the major OMCs, Hindustan Petroleum Corporation (HPCL) is the most vulnerable because its refining-to-marketing ratio is only 51 per cent, compared with 74 per cent for Bharat Petroleum Corporation (BPCL) and 80 per cent for Indian Oil Corporation (IOC).
HPCL, therefore, has the lowest internal refining cover and the greatest dependence on purchased and imported products.
“HPCL’s distillate yield is also lower at 76 percent, versus 80 percent for IOCL and 85 percent for BPCL, limiting its ability to fully benefit from strong diesel and jet-fuel cracks. This also flows negatively into the balance sheet, where HPCL’s leverage is highest,” Patel said.
IOC also benefits from stronger integration, which provides a refining buffer. However, its absolute exposure to fuel marketing, LPG under-recoveries, inventory, working capital and expensive crude procurement remains substantial, along with petrochemical losses.
BPCL is relatively better placed because of better integration, its higher distillate yield, Bina’s crude flexibility and a comparatively stronger balance sheet.
“Among gas-linked companies, city gas distributors (CGDs) face near-term margin risk from rising spot LNG prices and crude-linked LNG contracts. However, CGD volumes remain relatively resilient, with sector consumption increasing to 55.2 mmscmd in FY27TD from 45.3 mmscmd in FY26, although the imported component has also risen sharply,” the equity research firm said.
According to Equirus, Gujarat Gas is exposed to higher Brent-linked spot LNG prices and rupee depreciation, partly offset by gas-trading profits.
Mahanagar Gas (MGL) is better cushioned through Henry Hub-linked sourcing and pricing action, although margins remain volatile in the near term.
Petronet LNG is more exposed to LNG affordability and regasification volumes. Qatar normalisation, tariff visibility and petrochemical capital expenditure remain key watchpoints.
GAIL is relatively defensive because transmission earnings provide a buffer, while petrochemical and gas-marketing profitability improve due to higher realisations.
