OMCs' Operating Profit Margin Threatened by Rising Crude Prices
The Indian oil marketing companies (OMCs) have a cushion of $28-30 per barrel before higher crude prices could push their operating profit into negative territory, according to CareEdge Ratings. The ratings agency estimates that an integrated OMC's operating profit would turn negative at around $115 a barrel, assuming no further increase in petrol and diesel retail prices.
Currently, Brent crude is trading at $86-88/bbl, leaving the OMCs with a relatively comfortable position. However, this cushion could narrow quickly if crude prices rise. CareEdge flags a sustained Brent price above $100/bbl as a key level that could require further policy intervention.
The government has already deployed its fastest available lever earlier this year to offset the rise in crude oil prices in the form of an excise duty cut. The ₹10/litre excise duty cut on petrol and diesel announced in March 2026 is estimated to have absorbed a crude price move of roughly $16-17/bbl on behalf of India's OMCs.