New Delhi [India], April 9 (ANI): Oil marketing companies (OMCs) are likely to reduce losses on selling domestic LPG cylinders over the next few months due to the recent LPG price hike and falling international fuel prices, according to a report by Antique Stock Broking.
The government has increased the prices of LPG cylinders by Rs 50 from April. It has also raised excise duty on petrol and diesel by Rs 2 per litre.
According to the report, the LPG price hike is clearly aimed at covering the under-recoveries, or losses which OMCs are facing while selling LPG cylinders below the cost. These under-recoveries were becoming a financial burden.
It said, “With the latest hike, LPG losses will fall to INR 160/cyl in May-25, which we estimate will decline to INR 60/cyl by 2QFY26”.
The report estimated that losses on LPG will fall to Rs 160 per cylinder in May 2025, and further reduce to just Rs 60 per cylinder by the second quarter of the financial year 2025-26 (July to September 2025).
These lower losses are expected because of a fall in crude oil prices and a seasonal drop in international propane prices, especially from Saudi Arabia. Propane prices are likely to fall by USD 85 per tonne, reaching around USD 525 per tonne by August.
By August, LPG under-recoveries could fall further to Rs 60 per cylinder and may even come down to zero if these trends continue.
The report also mentioned that even if retail fuel prices are cut in the coming months, as long as crude oil remains around USD 65 per barrel, OMCs will still earn enough from their marketing margins to cover any losses in refining.
The report said OMCs are currently in a good position. They are enjoying strong profits from auto fuel sales, and Singapore refining margins (also known as GRMs) are also expected to improve. This is because of ongoing refinery shutdowns, better pricing between light and heavy crude oils, and the rollback of supply cuts by oil-producing countries.
Additionally, the report added that Saudi Arabia is expected to lower its official selling price (OSP), which will also help improve refining margins. (ANI)
Disclaimer: This story is auto-generated from a syndicated feed of ANI; only the image & headline may have been reworked by News Services Division of World News Network Inc Ltd and Palghar News and Pune News and World News
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