Oil & Gas Shares Decline as Crude Prices Surge Amid US-Iran Tensions
Reliance, BPCL to Adani Total Gas: Oil & Gas shares fall after crude oil prices jump on fresh escalation in US-Iran war
Mint
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Shares of oil and gas companies in India fell sharply on Monday, mirroring a broader market decline, as crude oil prices surged due to escalating tensions in the US-Iran conflict. The Nifty Oil & Gas index dropped by 1.6%, with Chennai Petroleum Corporation leading the losses at 3.2%. Brent crude prices reached $111.35 per barrel, the highest since early May.
- 01Chennai Petroleum Corporation shares fell by 3.2%, the largest decline in the Nifty Oil & Gas index.
- 02Brent crude oil prices increased by 1.91%, reaching $111.35 per barrel, while US West Texas Intermediate crude rose by 2.27% to $107.81.
- 03The recent fuel price hike by Indian Oil Marketing Companies (OMCs) was the first in four years, increasing petrol and diesel prices by ₹3 per litre.
- 04Analysts estimate that the fuel price hike reduces daily under-recoveries of OMCs from ₹600 crore to ₹500 crore.
- 05Integrated under-recoveries post-price hikes stand at approximately ₹13 per litre, implying a potential retail selling price hike of around ₹15 in Delhi.
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On Monday, shares of oil and gas companies in India experienced significant declines, reflecting a broader downturn in the Indian stock market. The Nifty Oil & Gas index fell by 1.6%, with all its constituents in the red. Chennai Petroleum Corporation recorded the steepest drop at 3.2%, followed by major players like Indian Oil Corporation, Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), each falling more than 2.5%. This downturn coincided with a surge in crude oil prices, driven by escalating tensions in the US-Iran conflict. Brent crude futures rose 1.91% to $111.35 per barrel, marking the highest level since May 5. The increase in crude prices has raised input costs for oil refiners, putting pressure on their margins. Last week, state-run Oil Marketing Companies (OMCs) raised petrol and diesel prices by ₹3 per litre, the first hike in four years, amid a nearly 50% increase in global crude prices. Analysts suggest that while this hike reduces daily losses, it remains inadequate relative to the prevailing costs.
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The increase in crude oil prices and subsequent fuel price hike will likely affect consumers through higher fuel costs, impacting transportation and daily expenses.
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