Kotak Institutional Equities raised its fiscal 2027 Brent crude assumption to $90 a barrel from $85 on Friday, telling clients that Indian oil marketing companies can still absorb short spikes near $102 without passing them immediately to car owners at the pump.
The upgrade lands as Brent settled around $102.50 on Thursday, reviving the same margin squeeze that pushed the government to cut special excise duty on petrol and diesel by Rs 10 a litre in late March. Kotak’s economists argue the combination of that tax relief and modest retail increases since then has stretched the break-even crude price for the three state-owned marketers closer to $102–$105 a barrel, buying policymakers a few weeks of stability ahead of festival travel.
Why pump prices stayed flat
Retail petrol in Delhi remained at Rs 102.12 a litre and diesel at Rs 95.20 on Friday, according to daily price compilations, even as the rupee weakened past 96.3 to the dollar. Business Today reported national averages near Rs 111.21 for petrol and Rs 97.83 for diesel in Mumbai, unchanged through the first week of October despite crude’s rebound above $100.
CARE Ratings estimated in a March note that the excise cut, if retail prices were frozen, could lift the OMC break-even toward roughly $106 a barrel from about $90 before the duty reduction. That arithmetic matters because every dollar on imported crude flows through the marketing margin when global benchmarks jump faster than domestic pump resets.
Kotak still expects earnings pressure at Bharat Petroleum, Indian Oil and Hindustan Petroleum if crude averages higher through FY27. The brokerage’s higher price deck is a signal that traders are no longer betting on a quick retreat in Middle East supply risk, even when daily headlines swing between diplomacy and naval deployments.
Currency and inventory effects
The rupee’s slide adds a second layer. Importers pay in dollars while households see rupee stickers at the nozzle. State-run banks have intermittently sold dollars to slow the move, but foreign portfolio outflows and oil company demand for hedging have kept pressure on the currency during the latest equity selloff.
OMCs also raised bulk diesel prices earlier in the quarter and tweaked premium petrol grades, moves that affect industrial buyers more than the mass market. Those channels recover some margin without the political friction of a headline petrol hike during the run-up to Sharadiya Navratri, which begins on 11 October.
What investors watch next
Equity investors are pairing the Kotak note with the Reserve Bank of India’s monetary policy meeting that starts on 5 October. Higher crude feeds inflation forecasts; SBI’s economic research desk said this week it expects a 25 basis-point repo increase and an upward revision to GDP and inflation projections.
For the marketing companies, the immediate question is how long management can hold the retail line if Brent sticks above $100 while the rupee stays weak. Kotak’s revised $90 FY27 assumption is not a call for instant pump shocks—it is a reminder that the cushion is finite, and that the excise cut bought time rather than permanently lowering India’s exposure to volatile imported energy.