Lockdowns and travel restrictions imposed by states such as Maharashtra, Delhi, Jharkhand and Rajasthan have dampened the sale of auto fuels and aviation turbine fuel, leading to refining and marketing companies reducing throughputs, a report said.

Going forward, the possibility of such a trend gathering pace, as more and more states resort to lockdowns amid a surging case count and strained healthcare system, cannot be ruled out, ratings agency ICRA said in a note.

ICRA also notes that the benchmark Singapore gross refining margins (GRMs) remain subdued due to the global supply overhang amid a demand slowdown and are unlikely to materially improve in the near-term, owing to the second wave of Covid-19 in certain large economies such as India and Japan. Additionally, though many countries have put travel restrictions on flights from India, the mutation, thought to be behind India's second wave, has spread to at least 10 other countries.

 As more countries witness a virulent second wave, oil demand and GRMs could be dampened, it said. "Refining and marketing companies are cutting down on capacity utilisation although the demand slowdown is not as severe as April 2020. "Nevertheless, the capacity utilisation and revenues and profitability of the refining and marketing companies are likely to be adversely impacted owing to the demand slowdown," said Sabyasachi Majumdar, Group Head and Senior VP at ICRA.

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