Rising oil prices to hit profit margins of OMCs, pump up upstream companies

The recent surge in crude oil prices, which has risen nearly 16% in early 2026, is poised to significantly impact the profit margins of oil marketing companies (OMCs) in India during the March quarter. Brent crude has escalated from approximately $71 per barrel to $82.3 per barrel, leading to increased feedstock costs that are compressing refining margins and softening fuel-price spreads. As per analysts, for every $1 increase in crude prices, OMCs' auto-fuel gross marketing margins can decline by about ₹0.55 per litre, resulting in a potential 7-9% reduction in their consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA). The report highlights that the integrated margins of major OMCs like IOCL, HPCL, and BPCL could see a decline of around $3-4 per barrel due to these factors. Additionally, the rise in crude prices has exacerbated under-recoveries on liquefied petroleum gas (LPG), which have more than doubled this quarter. However, upstream companies such as ONGC and Oil India stand to gain from the increased crude prices, with a projected earnings boost of 1.5-2% for every $1 rise in oil prices, provided that Brent remains above $70 per barrel. Furthermore, spot LNG prices have skyrocketed, leading to additional pressures on gas utilities like GAIL and Petronet LNG, impacting both their volumes and margins.