In respect of products, the spreads for petrol declined by $8.7/bbl QoQ from $15.8/bbl to $6.8/bbl and for jet fuel by $6/bbl QoQ from $14.7/bbl to $8.7/bbl. This is a significant fall which together with inventory losses could put severe stress on OMCs financials.

The government initiated a nationwide lockdown towards the end of March for three weeks putting restrictions on travel as part of efforts to contain the spread of coronavirus. This itself has resulted in fall in the marketing segment volumes resulting in 10-15 per cent overall decline in sales year-on-year. All the three OMCs—IOC, BPCL and HPCL have seen their marketing volumes declining between 12-15 per cent in Q4. Their refining throughput has already fallen in the January-March quarter.

“The marketing segment reported inventory losses during the quarter. However, high core marketing margins QoQ will provide respite to OMCs as the cost benefit has not been fully passed on to consumers,” ICICI Direct said.