Are OMCs in a sweet spot? MK Surana answers

economictimes.indiatimes.com:

«Now, whether there is a right time to cut the prices or not when the crude prices were going up, when the prices were not increased, there were definitely a strain on the oil marketing companies. And I think that it is logical for them to recover if they had some sort of under-requirements which they had obviously,» says MK Surana, Former CMD, HPCL.With crude now largely settling around the $75 to a barrel mark, is it really time for OMCs to cut prices? And is there merit in believing that they are now in a sweet spot?First, it is a good thing for the country and for the OMCs that the oil prices are benign, in spite of some sort of production cuts announced even just yesterday by Saudi and some sort of export restriction by Russia.

So that only means that the crude prices being in the range of $70 to $75 is more logical now than what it was earlier and that augurs well for a country like India. Now, whether there is a right time to cut the prices or not when the crude prices were going up, when the prices were not increased, there were definitely a strain on the oil marketing companies.

And I think that it is logical for them to recover if they had some sort of under-requirements which they had obviously. So that is, they have to recover that part and then only that is logical for them to consider the reduction in the prices that is the second part.

The third part is that whether the OMCs should be rated or which way it is rated. Of course, the analysts are better judge to do that.

But I believe, and I have said earlier also that the oil companies are under-priced compared to what the potential they have. Now, of course, market have got a way of looking at the things, but I think they are in a sweeter spot right now