Refiners stare at Rs 25,000 cr inventory loss as oil prices slump: Crisil

Indian oil refiners may have incurred an inventory loss of Rs 25,000 crore in the January-March period as oil prices slumped and are now likely seeing a plunge in refining margins in the current quarter, Crisil Ratings said on Thursday.

Crude prices nosedived from an average $55 per barrel in February to $33 in March and around $20 at the end of March as demand slumped because of the coronavirus (Covid-19) pandemic. The mayhem in the oil market meant that by the time crude oil is processed and converted into fuel, the rates have fallen, resulting in inventory losses.

“For oil refiners, the Covid-19 pandemic is delivering two blows: inventory loss of over Rs 25,000 crore in the January-March quarter because of a 70% fall in crude oil prices, and a likely plunge in gross refining margins (GRMs) in the first quarter (April-June) of fiscal 2021 because of demand destruction,” Crisil said in a note.