Q3FY26 Preview: Oil & Gas Earnings to Stay Mixed Amid Lower Crude, Stable Gas Prices

According to JM Financial’s Q3FY26 Oil & Gas Preview, upstream oil companies are expected to see a sequential moderation in earnings due to lower crude oil realisations during the October–December quarter.

Brent crude prices averaged around USD 82 per barrel in Q3FY26, down from approximately USD 86 per barrel in Q2FY26, which weighed on profitability for exploration and production (E&P) players. JM Financial expects crude realisations for Indian upstream companies to decline on a quarter-on-quarter basis, even as production volumes remain broadly stable.

Gas Segment Offers Stability

The brokerage notes that domestic gas producers are likely to deliver relatively resilient performance, supported by stable administered pricing and steady demand from fertiliser, power and city gas distribution (CGD) segments.

Gas realisations are expected to remain largely unchanged QoQ, cushioning earnings volatility for gas-heavy portfolios. This stability contrasts with oil-linked revenues, which remain more exposed to global price movements.

Also read: Budget 2026–27: PHDCCI Seeks Policy Reset to Strengthen MSME Sector

Refining and Marketing

For downstream oil marketing companies (OMCs), the report flags normalisation of refining margins in Q3FY26 after elevated levels earlier in the year. While marketing margins on petrol and diesel are expected to remain positive, gains are likely to be more modest compared to previous quarters.

Inventory gains from crude price movements are also expected to be limited, reflecting relatively range-bound oil prices during the quarter.

Capital Expenditure and Balance Sheet Trends

JM Financial highlights continued focus on capital discipline across the sector. Upstream players are prioritising selective exploration spending. Refiners and gas companies are channelling investments into petrochemicals, pipelines and energy transition-linked projects.

Balance sheets across the oil and gas space remain stable. It is aided by healthy cash flows generated in earlier quarters.

Does Venezuela Matter for Indian Oil & Gas Companies?

While Venezuela holds the world’s largest proven crude reserves, its oil infrastructure remains severely underinvested.

Any potential increase in Venezuelan production, even under improved geopolitical conditions, would likely materialise only over the medium to long term. This limits immediate effects on global oil balances. For India, which currently does not import Venezuelan crude in meaningful volumes due to sanctions and logistics, the impact remains indirect, largely via global crude price sentiment.

“Indian companies do have a share in one or two projects in Venezuela, but because of the lack of pipelines and the infrastructure itself, not adequate investment taking place is affected," said Ex-Secretary, MoCI, Dr Ajay Dua in a conversation with us. "India is trying to set off some of those assets by buying oil from Venezuela, selling it in the high seas, sometimes getting it to India if it's not able to sell it, but the exposure is limited.”

What's The Outlook?

JM Financial expects Q3FY26 earnings to reflect price normalisation rather than volume shocks, with gas-focused businesses offering relative earnings visibility. The brokerage maintains that global geopolitical developments will remain an overhang but are unlikely to disrupt India’s oil and gas earnings trajectory in the near term.

Also read: Venezuela Impact: Why Next 18 Months Are Critical For India?