JM Financial sees crude stabilising at $70-72 a barrel in the medium term

Dayanand Mittal, Oil & Gas and Telecom Research Analyst at JM Financial Institutional Securities, expects crude to settle around $70–72 per barrel over the medium term. He explained that this range balances “the break-even price for US shale, which is around $65–66,” with Saudi Arabia’s need for higher prices near $80–85 to fund fiscal requirements and Aramco’s diversification strategy.In the near term, however, Mittal believes crude will likely stay soft given OPEC+ supply hikes and US-Saudi alignment. “This will ensure crude remains soft for the next three to four months,” he said, adding that it supports US objectives of lower inflation and geopolitical leverage.

For investors, this trend translates into strong quarters for oil marketing companies (OMCs) as softer crude and robust refining margins improve profitability. Mittal is neutral on the OMC basket but favours Bharat Petroleum Corporation (BPCL) for its refining strength and Indian Oil Corporation (IOC) on attractive valuations.

Among exploration plays, Mittal prefers Oil India over ONGC, highlighting it as a “two-three-year compounding story” with reasonable valuations.

Also Read:

India’s Russian crude imports jump to 35% as price gap narrows, diversification key, says MK Surana

On GAIL, he sees meaningful upside from tariff revisions, with earnings potentially rising by 10% once rates move closer to ₹70–72 per unit. However, he is less optimistic on the GAIL Gas listing in the near term, expecting only a modest 2–3% boost to valuations.

Also Read: ICRA, EY analysts say crude sanctions may raise costs, but India has options

Despite narrowing, Russian crude discounts of $2–3 per barrel remain significant, translating to nearly $1 addition to OMC gross refining margins — an 8–10% lift to earnings before interest, taxes, depreciation and amortisation (EBITDA). Mittal said this is still “quite sizable” for companies relying on Russian imports.

For the entire interview, watch the accompanying video

Catch all the latest updates from the stock market here