Current refining margins on fuel unsustainable, will hurt refiners: Oil secretary
Pankaj Jain said on Thursday.
“Do you think the cracks of zero or one ($/barrel) on gasoline (petrol) are sustainable? Even the cost of refining is not getting recovered on petrol,” Jain told reporters on the sidelines of an industry event. “The entire product market for exports is in complete turmoil.”
Crack spreads are the difference between the prices of crude oil and refined products such as petrol and diesel. Globally, a combination of weak fuel demand and higher refinery runs has sharply pulled down margins on diesel and petrol in recent months. This hit domestic refiners’ earnings in the April-June quarter.
On whether declining crude prices — down about 18% since July 4 — would prompt a reduction in pump prices, Jain said oil companies would take that call if they are confident that crude prices would stay low for longer.
Lower refinery margins may be offset by higher marketing margins at domestic refiners such as Indian Oil and Bharat Petroleum, which operate a large network of fuel pumps.
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