Feature

Crude is cheap but is it a good time to buy into OMCs?

Their valuations look slippery as demand recovery looks uncertain

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Not just global economies, but crude oil has also been on a wild ride since the start of 2020. As OPEC’s de-facto leader Saudi Arabia and Russia bickered about who would do the heavy-lifting in production cuts, but did the opposite of that, Brent Crude continued its downward spiral. It has fallen almost 50% since its January 2 level of $65/barrel. In fact, it even hit its two-decade low of $16 on April 22. One would think a country like India should have been the biggest gainer from this drop. We source nearly 85% of our crude requirement. With the collapse in price, the government stands to save almost 50% ($50 billion) on its import bill, assuming the average price at $30/barrel. But that’s the good part of the story.