With crude oil prices rising beyond USD70 per barrel mark and high taxes on petrol and diesel, Indian oil marketing companies (OMCs) may be compelled to slash their marketing margin, credit rating agency ICRA said.

Brent crude price in the international market crossed USD71 per barrel today hitting a two year high. Prices are expected to rise further with easing of COVID related restrictions in several countries. “The impact of the crude oil price surge on oil public sector companies is expected to be mixed. An improvement in the GRMS is expected owing to increasing demand. However, with the retail auto fuel prices already at historic highs the oil marketing companies may be forced to cut the marketing margins," Sabyasachi Majumdar, Group Head & Senior Vice President at ICRA said.

The central and state taxes make up for about 60 per cent of the retail selling price of petrol and about 54 per cent of diesel. Centre levies Rs 32.90/litre of excise duty on petrol and Rs. 31.80/litre on diesel. "Unless the Centre and State governments cut the excise and VAT rates PSU OMC would be constrained in passing on further price hikes in the retail market," added Mr. Majumdar. "This is owing to the already high prices and a backlash from consumers. Accordingly, the marketing margins of PSU oil marketing companies may be adversely impacted."
 

FICCI urges Minister Piyush Goyal for graded tack to unlock economy

India trade deficit hits Eight-month low in May led by rise in exports

India trade deficit hits Eight-month low in May led by rise in exports