Refining margins in India are likely to fall below mid-cycle levels in the financial year ending March 2025 (FY25) amid lower product cracks, regional oversupply, and lower benefits from price differences between crude varieties, Fitch Ratings says.

Healthy marketing margins for the oil marketing companies (OMCs) will be aided by lower Brent crude oil prices, and our forecast for India’s petroleum product demand to rise by 3%-4% in FY25.

EBITDA for Indian upstream producers will ebb on subdued production and lower crude oil prices, although they have adequate balance-sheet buffers.

Strong demand and adequate cash buffers will support the sector's high capex requirements to expand production at upstream assets, increase refinery capacity for the OMCs, and invest in the energy transition.