Government oil companies are getting good profit on selling petrol-diesel

Petrol-diesel prices in the country may soon see a fall. Retail margins on diesel turned positive in the January-March quarter for the first time in 15 months. According to an estimate by ICICI Securities, this has happened due to stable domestic prices and a fall in international prices.
Oil marketing companies estimate that they made a profit of 50 paise per litre of diesel sales in the fourth quarter of the last financial year. Whereas, the companies were incurring a loss of Rs 6.5 per litre in the third quarter. From January to March 2022, this loss was Rs 2.6 per litre.
Oil marketing companies were suffering because domestic prices were stable and international prices were skyrocketing. International crude oil prices rose last year due to increased demand, temporary refinery capacity constraints and supply uncertainties stemming from the Ukraine war.
Last year, petrol prices also increased significantly, but they also came down at a faster pace than diesel. The retail margin on petrol is expected to be Rs 6.8 per litre in the January-March quarter. This is less than Rs 10 in the third quarter. Oil marketing companies have incurred losses on retail sales of petrol in all three quarters starting January 2022.
The fourth quarter has expected gross refining margins of $10 to 11 per barrel and positive marketing margins. This will help the operating income of Indian Oil, Hindustan Petroleum and Bharat Petroleum grow by a combined 77% quarter-on-quarter. The brokerage has said this in its report. At the same time, the net profit is estimated to increase by 3.3 times.
The recent decision of OPEC+ to reduce supply from May may cause some concern to oil marketing companies. Since this decision to reduce production on Sunday, the price of crude oil has gone up by 5%. This may impact the margins of fuel retailers.
If the decision of OPEC+ to reduce production does not affect crude oil prices much, then the companies will continue to make profits. In such a situation, it may be decided to reduce the prices of petrol and diesel in future. On Friday, Brent oil futures were trading down 0.06% at $84.94 per barrel.