New Delhi,jun 16
Any further escalation in the Middle-East crisis or a sharp rise in crude prices could pose a serious risk to earnings, especially for Indian Oil Marketing Companies (OMCs) and gas companies.However, Indian OMCs and gas companies are currently facing mixed impacts from the ongoing volatility in crude oil prices.According to a report by ICICI Securities, even with crude currently trading at USD 73-74 per barrel, there is already a material impact on the earnings of oil marketing companies (OMCs), while upstream companies could see some upside.The report stated, “We estimate a material impact on OMC earnings and upside risk to upstream earnings even with crude at USD 73-74/bbl as is the case now”.It also noted that any further spikes in crude prices are unlikely to significantly boost upstream company earnings but could negatively affect OMCs and gas companies.This is because the price of LNG, which is linked to crude, will also rise steadily, increasing input costs for gas utilities.Despite these developments, the report stated that analysts of crude have not made any changes to their estimates or views for now. They plan to monitor the crude oil markets closely over the next few weeks before taking a more definitive stance on the oil and gas coverage universe. The report highlighted that the current rebound in crude prices remains lower than the average crude prices recorded in FY25 and well below the last four-year average.As a result, the overall impact on the profitability of Indian oil and gas companies is not considered unreasonable at this stage.However, the report acknowledges the sharp movements in stock prices of energy companies, reflecting market concerns about the Middle East situation.
