OMC Shares Decline Up to 5% as Crude Oil Surpasses $100 per Barrel

Original: OMC shares: HPCL, BPCL, IOC slide up to 5% as crude jumps above $100/bbl

Business Standard•Apr 2, 20264 min

In a Nutshell

Shares of state-owned oil marketing companies in India, including Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL), and Indian Oil Corporation (IOCL), fell by up to 5% following a surge in crude oil prices above $100 per barrel. This decline is attributed to geopolitical tensions and ongoing military operations in the Middle East.

Key Points

01OMC stocks fell up to 5% amid rising crude oil prices.
02Hindustan Petroleum Corporation (HPCL) hit a near 52-week low of ₹318.10.
03Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOCL) also saw significant declines.
04Geopolitical tensions, particularly regarding Iran, are impacting oil prices and market sentiment.
05Analysts predict potential retail price increases for fuel in response to ongoing conflicts.

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Full Summary

Shares of state-owned oil marketing companies (OMCs) in India experienced significant declines on Thursday, with Hindustan Petroleum Corporation (HPCL) dropping 5% to ₹318.10, Bharat Petroleum Corporation (BPCL) also falling 5% to ₹266.55, and Indian Oil Corporation (IOCL) decreasing 4% to ₹130.30. This downturn follows a sharp rise in crude oil prices, which surpassed $100 per barrel due to comments from US President Donald Trump regarding military operations in Iran. The ongoing geopolitical tensions, especially the Iran-Israel conflict, have raised concerns about energy supply disruptions, particularly through the Strait of Hormuz, a critical transit route for India's oil imports. Analysts note that while recent excise duty cuts may alleviate some financial pressure on OMCs, they continue to face significant losses on fuel sales due to volatile under-recoveries. Furthermore, there is potential for retail price hikes of ₹2-4 per liter if the conflict persists, as OMCs struggle with rising crude and operational costs without the freedom to adjust retail prices. The overall market sentiment remains cautious as the BSE Sensex fell 2% amid these developments.

Key Figures

5%

Decline in shares of HPCL and BPCL

₹100

Crude oil price per barrel

₹2-4

Potential retail price increase per liter of fuel

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Why It Matters

The rise in crude oil prices could lead to increased fuel costs for consumers, affecting transportation and overall living expenses.

Who is affected

commuters and consumers of petrol and diesel in India

What to know

Consumers should prepare for potential increases in fuel prices and consider adjusting their budgets accordingly.

FAQ

The decline was primarily due to a surge in crude oil prices above $100 per barrel, influenced by geopolitical tensions and military operations in Iran.

OMCs are incurring significant losses on fuel sales due to volatile under-recoveries, despite recent excise duty cuts aimed at reducing their financial burden.

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