Indian Oil Firms to See EBITDA Rise Amid Falling Brent Prices

Fitch Ratings projects a rise in EBITDA for Indian oil companies in 2025-26 as steady demand coincides with declining Brent crude prices. Refining margins will benefit from lower prices, strong demand, and gradual growth in capacity. Brent prices are expected to fall to USD 70 by 2025.

Indian oil marketing companies are anticipated to experience a rise in their EBITDA by the financial year 2025-26, according to Fitch Ratings.

This projection comes in the backdrop of sustained demand growth and a decline in Brent crude oil prices, expected to settle at USD 70 per barrel in 2025 and USD 65 per barrel in 2026.

The global rating agency also forecasts gross refining margins for these companies to range between USD 5 to USD 6.8 per barrel, ensuring robust marketing margins throughout this period.

Current trading data reveals that Brent crude is priced at USD 75.76 per barrel. Lower crude prices will support refining margins, which will be bolstered by stronger demand and slower net capacity growth.

Notably, India Oil Corporation Ltd, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited have reported refining margins of USD 3.7 to USD 6.0 per barrel for the initial nine months of 2024-25.

This contrasts with the peaks of USD 9.1 to USD 12.1 per barrel seen in 2023-24.

Fitch's Brent price projections account for OPEC+'s substantial spare capacity, rising global production, and tempered demand growth. However, the possibility of volatile crude prices remains, influenced by geopolitical factors and uncertain future energy policies of the US.

Soon after taking office, US President Donald Trump outlined a robust plan to maximize oil and gas production, emphasizing strategic reserves and addressing international oil pricing dynamics.

(With inputs from agencies.)