Emkay Global Financial Services has downgraded the ratings of major Indian oil marketing companies (OMCs) — Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) — due to a sharp rise in crude oil prices and the impact of windfall taxes. The brokerage noted that Brent crude prices have surged significantly, averaging $124 per barrel in April 2023, driven by escalating geopolitical tensions in West Asia. This increase has altered the earnings outlook for OMCs, which are expected to see a 40% decline in Ebitda for IOCL and BPCL, and a staggering 60% drop for HPCL in the financial year 2026-27 (FY27). The imposition of windfall taxes has further capped refining gains, leading to negative marketing margins and volatile refining spreads. Emkay has revised its target prices for these companies downwards by 20-25%, reflecting a more conservative margin outlook. The brokerage warns that sustained high crude prices could necessitate retail fuel price hikes or excise duty cuts to restore margins, with oil price volatility remaining a key risk tied to geopolitical developments.