NEW DELHI: Increased Margins on Fuel Sales

The marketing margins on petrol and diesel have seen a significant rise, reaching Rs 13.60 per litre for petrol and Rs 10.70 for diesel, according to a recent market update by Motilal Oswal Financial Services Ltd. This increase, attributed to muted oil prices and steady refining operations, marks a 34% jump compared to the previous quarter (July-September).

The report suggests that these higher margins could justify a reduction in fuel prices, especially given the high cost of living being a prominent issue in current political discussions. Fuel prices were last reduced on March 14 by Rs 2 per litre, a time when the crude mix bought by Indian refiners was at $84.49 per barrel, significantly higher than the current average of $72.51.

Optimistic Outlook for Oil Marketers

The report also forecasts lower inventory losses for the current quarter, providing an additional boost to oil marketing companies' profitability. Unlike the second quarter, where profitability was affected by losses on fuel stocks and sliding crude prices, the current quarter is expected to be more stable.

Challenges with LPG Under-Recovery

However, the report highlights an 18% increase in under-recovery on LPG supplied to households, a risk that remains without government financial assistance. Despite this, marketing margins could potentially offset the under-recovery on selling market-priced LPG at government-controlled rates.