Crude Prices Spike Above $100 Barrel, Squeezing India's State-Run Oil Marketing Companies

India's state-run oil marketing companies (OMCs) are facing pressure from high crude prices, which have risen above $100 per barrel. The Indian basket price has hit a record high of $115.98 per barrel on September 9.

Hindustan Petroleum Corporation (HPCL) is the most vulnerable among the three OMCs, followed by Indian Oil Corporation (IOCL). HPCL's dependence on purchased or imported products and higher leverage make it more susceptible to expensive crude prices.

According to Equirus Securities, if crude remains above $100 per barrel, OMCs could face negative petrol and diesel marketing margins, higher LPG under-recoveries, higher crude-landing, freight and insurance costs, working-capital and debt accumulation, and inventory losses if crude subsequently corrects sharply.

The outlook suggests limited immediate relief, with S&P Global Energy expecting Middle East crude and condensate exports to average only 10-16 million barrels per day through 2027. Brent crude futures have fallen $3.28, or 3.05%, to $104.35 a barrel at 1309 GMT on Friday.