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Soft crude oil prices to lower working capital requirement of OMCs

According to CARE Ratings, the impact of a fall in crude oil price owing to the coronavirus (Covid-19) pandemic on the domestic downstream sector would not be as severe as it is on the upstream sector

India stands to lose 3,00,000 bpd of crude oil supply from Iran, and 4,00,000 bpd from Venezuela

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As there has been a significant decline in crude prices, as well as demand for petroleum products, the RTP is expected to come down, while the transportation and storage charges are expected to remain at similar levels

Jayajit Dash Bhubaneswar

3 min read Last Updated : May 01 2020 | 5:50 PM IST

The slump in international crude oil prices is expected to prune the working capital requirement of oil marketing companies (OMCs) in line with the declining value of inventories and receivables.

A study by CARE Ratings forecasts that lower crude oil prices are slated to lead to lower gross under recoveries (GURs) towards liquefied petroleum gas (LPG) and superior kerosene oil (SKO) during FY21. Already, GUR has dropped significantly from Rs 9266 crore in Q1 to Rs 4582 crore at the end of Q3 in FY20.

The combined debt level of OMCs in the public sector stood at Rs 1.42 trillion

Topics : Crude Oil Price crude oil production oil marketing companies