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Kotak Raises FY27 Crude Forecast to $90; OMCs Brace for Price Spikes
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Firstpost•02-10-2026, 13:05
Kotak Raises FY27 Crude Forecast to $90; OMCs Brace for Price Spikes
- •Kotak Institutional Equities increased its FY2027 crude oil price assumption to $90 per barrel from $85 due to prolonged supply disruptions and heightened market volatility.
- •The West Asia conflict has caused seven months of disruption, with no clear end in sight for normal supply conditions.
- •Indian OMCs have a cushion against sharp crude price increases, with a break-even crude price of $102-$105 per barrel due to fuel pricing changes.
- •Higher crude prices are expected to pressure OMC earnings in FY2027, but a rollback of petrol and diesel retail prices is unlikely soon.
- •Kotak flags LPG under-recoveries as a key concern, estimating around Rs 243 billion in Q2 FY2027 due to unchanged domestic prices amid elevated international LPG costs.
Key Questions Answered
Kotak Institutional Equities raised its FY2027 crude oil price assumption to $90 per barrel from the previous $85, citing prolonged supply disruptions and global market volatility linked to the West Asia conflict.
Changes in fuel pricing have raised the break-even crude price for OMCs to between $102 and $105 per barrel. Additionally, a Rs 10 per litre excise duty cut and a retail price hike of about Rs 7.5 per litre for petrol and diesel have enhanced their capacity to absorb higher costs.
Kotak estimates that LPG under-recoveries could reach approximately Rs 243 billion in the second quarter of FY2027 because domestic LPG prices remain unchanged while international prices stay elevated.
