Oil marketing companies may be required to raise prices further’

Fitch Ratings warned on Tuesday that further increases in retail fuel prices may be required to restore state-run oil marketing businesses' marketing margins to pre-November levels.

Despite reference crude oil prices climbing by roughly $27 per barrel (or Rs 13 per litre) throughout the period, the November 2021-March 2022 retail price freeze was one of the longest in recent years. Oil marketing companies (OMCs) may suffer marketing losses in the fourth quarter of the fiscal year ending March 2022 (FY22) as a result of the freeze.

"Retail fuel prices have since been raised by just about Rs 11," the ratings agency stated, "implying that more price hikes may be required to restore pre-November marketing margins, and early FY23 marketing margins may also be under pressure." During periods of low oil prices, OMCs benefited from substantial marketing margins, (March-June 2020), according to Fitch.

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