Fitch Group company India Ratings and Research (Ind-Ra) has a maintained a ‘stable’ outlook for the oil and gas sector for FY20, driven by continued strong domestic petroleum product demand, healthy gross refining margins, petrochemical expansion by refiners and rise in the usage of natural gas.
Ind-Ra expects crude price to remain range bound at $55/bbl-$65/bbl, driven by a rise in supply from the U.S., which would be offset, to some extent, by the recent production cut announced by OPEC, the continued debt crisis in Venezuela and the limited clarity on the sanctions imposed on Iran. Thus, the range-bound crude price would limit large inventory gains or losses. Further, Ind-Ra expects the bulk of the fuel subsidy to be borne by the Centre as against FY19, when the government, for a brief period, asked oil marketing firms to absorb losses from marketing operations.