New Delhi: Refining margins on fuels have fallen to unsustainably low levels and will hurt domestic refiners, especially those that do not operate petrol pumps, oil secretary Pankaj Jain said on Thursday.

“Do you think the cracks of zero or one ($/barrel) on gasoline (petrol) are sustainable? Even the cost of refining is not getting recovered on petrol,” Jain told reporters on the sidelines of an industry event.

“The entire product market for exports is in complete turmoil.

” Crack spreads are the difference between the prices of crude oil and refined products such as petrol and diesel.

Globally, a combination of weak fuel demand and higher refinery runs has sharply pulled down margins on diesel and petrol in recent months.

This hit domestic refiners’ earnings in the April-June quarter.

On whether declining crude prices — down about 18% since July 4 — would prompt a reduction in pump prices, Jain said oil companies would take that call if they are confident that crude prices would stay low for longer.

Lower refinery margins may be offset by higher marketing margins at domestic refiners such as Indian Oil and Bharat Petroleum , which operate a large network of fuel pumps.

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Which are the best stocks to buy? Russia's search for new crude markets helps India cut its oil import bill, but... « Back to recommendation stories I don't want to see these stories because They are not relevant to me They disrupt the reading flow Others SUBMIT “Every refiner is not a marketer.

A lot of refiners will lose money.

The refinery which doesn’t market fuels has to take a hit,” Jain said, referring to standalone refiners such as Mangalore Refinery and Petrochemicals Ltd that do not have a retail network, and so will not have the benefit of wider marketing margins to balance weaker refining margins.

Hindustan Petroleum , another state-run refiner that sells more fuels at pumps than it produces at its refineries, is likely to gain as it can obtain fuels from other refiners at relatively lower prices while selling them to drivers at pump prices that have barely changed in a long time.

Refiners also benefit from falling crude prices, which are down about $16 per barrel or about 18% since July 4 to $71 per barrel.

Lower crude prices bring down the energy bill at refineries.

Every $10 per barrel decline in the price of crude oil reduces the cost of fuel consumed internally by $0.9 per barrel.