Mumbai: India has been able to reduce the overall cost of importing crude oil by taking advantage of the discount on Russian oil. However, Indian oil marketing companies have failed to take maximum advantage of this favorable situation. A report released in this regard said, India is benefiting by importing cheap Russian oil to reduce its total crude oil import cost, but the cost of raw materials from Indian oil marketing companies is there. There is no major decline compared to crude.
Companies like Naira Energy will benefit more from Russian crude oil. Nayara Energy is owned by Russian OMC Rosneft. Indian oil companies have to spend more on transportation and insurance costs as compared to Nayara Energy. As a result, Indian companies find Russian crude oil more expensive than naira energy.
Indian Oil Corporation’s crude prices for the second quarter of fiscal 2023 are around $115 per barrel. While in the same period, the price of Dubai crude oil was around 105 dollars per barrel. Similarly, the cost of Bharat Petroleum Corporation’s raw material was around $115 per barrel during this period.
Dubai crude is used as a benchmark in the oil industry. In such a scenario, if Indian refiners’ crude oil prices fall as compared to Dubai crude oil. So it increases their gross refining margin. Also they are better than Singapore GRM.
Indian oil marketing companies have reported that their GRMs are at strong levels compared to Singapore’s GRM complex margins. IOC’s GRM in FY 2023 is $19.5 per barrel. While the Singapore GRM complex margin was $10.8 per barrel in the same period. While BPCL’s GRM during this period was $20.2 per barrel. During this period IOC and BPCL’s GRM has been better than major refiners like Reliance Ind., Chennai Petroleum and Mangalore Refinery and Petro.
Notably, India has emerged as a major buyer of Russian crude following the Russia-Ukraine war and sanctions on Russian crude by many countries. Russia’s share of India’s crude oil imports, which was barely 1-2 percent before the start of the war, has gradually increased to 21.5 percent in FY2023. According to a report, Russia is followed by Iraq at 21.4 percent and Saudi Arabia at 16.7 percent.
Has a cell rating on HPCL. The target price of which is Rs. is 257. At the same time, IOC and BPCL have been downgraded and given a target of Rs 89 and Rs 357 for them. Also, the brokerage firm said, it will re-rate Indian OMCs only if they continue their strong refining performance after the 2024 general elections. OMC will keep more control on pump prices during this period.