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Fitch Ratings has said that Indian oil marketing companies' (OMCs) marketing segment to turn profitable from the financial year ending March 2024 (FY24) as crude oil prices fall to Fitch's assumption of $78.8 per barrel, following large losses in FY23 due to high crude prices and unchanged retail fuel prices. It said this should enable the OMCs to partly recoup the FY23 (April 2022 to March 2023) losses in first half of FY24, before the fall in crude prices in recent months is reflected in retail prices.

The rating agency expected India's petroleum product demand in the financial year ending March 2024 (FY24) to grow by a mid-single digit percentage after a 10 per cent rise in FY23, which was aided by the post-pandemic pent-up demand. Medium-term product demand growth is supported by Fitch's expectation of 6-7 per cent GDP growth for India over the next few years, driven by the government's increasing infrastructure spending and a pick-up in industrial activity.

Fitch Ratings also expects Indian refiners' gross refining margins (GRM) to moderate in FY24 from the record high in FY23 as it expects an easing of tight industry conditions. However, it still expects FY24 GRMs to be above mid-cycle levels due to increasing demand after China's reopening and uncertainty over Russia's transportation fuel supply. The normalisation of product spreads has also prompted India to discontinue in recent months the special excise duties on exports of diesel and aircraft turbine fuel that were imposed in July 2022.