Petroleum Realities

Brent crude settled at $78.40 today. Down 3.2% on the week. OPEC+ compliance is fraying - Iraq and Kazakhstan overproduced by 400K bpd in Q2 and the cartel's 'voluntary cuts' language is getting softer by the month.

Local translation: petrol in Mumbai is ₹104.66/L as of this morning. Diesel at ₹92.31. The price hasn't moved more than 0.5% in six weeks, which means the OMCs are absorbing the Brent swings through inventory smoothing. That won't last if Brent drops below $75 - the under-recovery becomes too large and they'll have to pass it through.

The structural story: Indian refining capacity is ~257 MMTPA and the government wants 450 MMTPA by 2030. But global refining margins are compressing as Chinese product exports flood Asia. The new Paradip refinery expansion is a bet on domestic demand growth, not export margin. If GDP growth slips below 6%, that bet sours.

On the forecourt: the local Shell station on Peddar Road still has the highest margins in the city. ₹7/L premium over IOC. People pay it for the coffee.