Rating agency ICRA reported a subdued outlook for oil refiners in the near term due to global capacity additions outstripping demand growth. The agency expects oil marketing companies to close the current fiscal year with high gross under-recoveries on account of high crude prices and a weakness in the rupee against dollar in the earlier part of FY14.
It expects the gross under-recoveries to come down in FY15 from FY14 levels due to the monthly rise in diesel prices and if the rupee were to remain stable at the current levels. Going forward, inter-¡national refining margins are expected to remain subdued in the medium term due to global refinery capacity additions outpacing demand growth, according to K Ravichandran, Senior Vice President, ICRA.
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