Government likely to deregulate domestic crude prices

News: According to Times of India, the Government Of India may deregulate domestic crude oil. Currently, the government decides which PSU refinery gets how much crude from each producer. The price is then calculated based on a formula with Brent oil as a marker.

Views: The new system may calculate crude prices based on quality and yield of the oil. A large upstream PSU company is likely to see 4-5% revenue increase in case prices are deregulated. Subsequent impact on refiners will be minimal as domestic crude forms lower proportion (15-20%) of total crude sourcing.

Impact: Positive