OMCs, RIL better placed; oil producers stare at losses as crude plunges

The sharp fall of 25 per cent in the Brent crude oil price to below $19 a barrel over two days is not a good news for domestic oil producers, such as ONGC, Oil India and even Vedanta, whose subsidiary Cairn India is involved in oil production and exploration, as well as Reliance Industries (RIL). Oil marketing companies (OMCs), too, will be hit in the short run, but they stand to gain if oil prices sustain at lower levels. Globally, the demand-supply mismatch, with oil supplies exceeding demand, has led to storage issues. This was the key reason for WTI crude oil May futures tumbling into negative territory, and Brent crude prices slipping to $25 levels on Monday, even as major oil-producing countries have announced deep output cuts. On Tuesday (11.28 pm IST), Brent prices fell another 27 per cent.