Mumbai, April 19 (TIWN) Further hikes in retail fuel prices may be required for state-run oil marketing companies' marketing margins to reach pre-November levels, Fitch Ratings said on Tuesday.

Besides, Fitch cited that robust core refining margins as well as windfall inventory gains should allow OMCs to mitigate potential marketing losses in the near term.  "We believe that robust core refining margins and windfall inventory gains should mitigate potential marketing losses in the near term, and the OMCs may see opportunities to recoup some of the losses in periods of falling oil prices, if and when that happens." 

"We expect such instances of indirect state interference in fuel prices to be temporary, and their impact on the standalone credit profiles (SCPs) of the Indian OMCs to be neutral over the long term."  However, if crude oil prices are sustained beyond Fitch's base-case assumptions, then record-high retail fuel prices may limit the extent to which the changes are passed on, pressuring OMCs' credit metrics.aa  Furthermore, Fitch said that freedom on retail fuel pricing continues to remain a key area requiring clarity before the government's proposed divestment of Bharat Petroleum Corporation Limited's can be concluded.