India's petroleum demand to grow 3-4% in FY25: Fitch Ratings

India’s petroleum products demand is expected to rise by three to four percent in the financial year ending March 2025, lower than five percent growth in FY24, according to a report by Fitch Ratings.

The growth in the current fiscal is supported by rising consumer, industrial and infrastructure demand, the rating agency said in the report, projecting India’s GDP growth at 6.4 percent in FY25. The growth in petroleum product demand is likely to be broad-based, with diesel and petrol accounting for the majority, it added.

For India’s oil marketing companies (OMCs), refinery margins are expected to fall below their mid-cycle levels in FY25 amid lower product cracks, regional oversupply, and lower benefits from price differences between crude varieties, it said.

However, marketing margins would be healthy on lower Brent crude oil prices than FY24. “This will mitigate the pressures from lower refining margins for the OMCs, although pure refiners like HPCL-Mittal Energy Limited’s (HMEL, BB+/Stable) will face greater pressure on profitability. We expect refining margins to recover to their mid-cycle levels in FY26, as the regional oversupply eases and Brent crude oil prices fall in line with Fitch’s assumption, while we project marketing margins to remain supportive. HMEL’s low rating headroom in FY25 will improve in FY26 due to a gradual normalisation in refining margins,” the report said.