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Oil marketing firms look set for Q2 earnings rebound despite risks
Brent is above $90 per barrel, while integrated margins for IOC, BPCL and HPCL have improved sharply versus Q1 figures.
Brent crude is trading above $90 a barrel, but still below the roughly $105 peak seen in the June quarter, and that mix is expected to help oil marketing companies (OMCs) rebuild earnings in Q2 even as risks persist. LiveMint Markets notes that lower crude prices, and easing freight and insurance costs, could help offset Q1 losses, with the outlook shaped by ongoing West Asia tension and recent concerns around sanctions involving entities doing business with Iran.
The article highlights uncertainty around the durability of the crude-price environment, even though an initial market reaction was muted because Iran exports only about 0.5% of global oil output. It also points to the International Energy Agency projection of a supply surplus in calendar 2027, which would improve the medium-term backdrop for OMCs, even as hostilities and market disruptions remain possible.
LiveMint Markets adds that Brent softened to around $72 per barrel in early July after a US-Iran memorandum of understanding was signed on June 17, but the resumption of hostilities has pushed prices back above $90. It also describes how the market is staying adequately supplied, citing a special Strait of Hormuz permission for Iraq, higher ship-to-ship crude transfer activity, and inventory drawdowns by the US and China.
For company-level expectations, the report namechecks Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp, and says Q2 results are expected to be strong. It also cites Nomura Global Markets Research, estimating integrated margins at $11.7 for IOC, $13.3 for BPCL, and $8.3 for HPCL per barrel, compared with $7.3, $5.5, and negative $4.5 per barrel in Q1, and explains integrated margins include refining plus marketing margin, LPG under-recoveries, and windfall tax benefits.
Latest closeWTI crude $86.62 ▲3.9%|Brent $88.80 ▼0.6%