Kotak Raises FY27 Crude Oil Forecast to $90 Per Barrel
Kotak Institutional Equities has raised its crude oil price assumption for FY2027 to USD 90 per barrel from USD 85, citing prolonged supply disruption and elevated oil price volatility.
The report states that the West Asia conflict and resulting disruption have persisted for seven months with no clear visibility on normalisation. Global oil markets have remained resilient despite the disruption.
Kotak notes that higher crude prices would keep OMC earnings under pressure in FY2027, but the companies have gained some protection from changes in fuel prices. A Rs 10 per litre excise duty cut and about Rs 7.5 per litre increase in petrol and diesel retail prices have raised the OMCs' break-even crude price to around USD 102-105 per barrel.
The report expects limited scope for another petrol and diesel retail price increase in the near term, while saying earlier excise and retail price changes could be rolled back only later as crude prices ease. It expects strong second-quarter results to offset losses incurred in the first quarter.