IOC shares slide 4%; BPCL, HCPL down 2%; What's dragging OMC stocks?

Shares of oil marketing companies (OMCs) declined on Thursday after JM Financial said crude oil prices could stabilise around $70 per barrel in the near term, up from current levels of about $60, while concerns over a sharp hike in excise duty on auto fuels also weighed on sentiment.

 

Bharat Petroleum Corp. (BPCL) stock fell as much as 1.67 per cent to ₹362.2 per share, the steepest decline since December 11 this year. Shares of Indian Oil Corp (IOC) and Hindustan Petroleum Corp (HPCL) slid 4.02 per cent and 1.63 per cent, respectively. 

 

As of 11:55 AM, BPCL was trading 1.3 per cent lower compared to a 0.21 per cent gain in the Nifty50 index. Shares of IOC and HPCL were down 3.4 per cent and 0.7 per cent. So far this year, BPCL, IOC, and HPCL shares have risen by 24 per cent, 19 per cent and 13 per cent, respectively. In the same period, Nifty50 has risen by 9.3 per cent.

JM Financial on OMCs

The fall in prices comes amid a JM Financial report that said that in the medium term, crude oil prices could stabilise around $70 per barrel, from the current 60.15 mark. 

 

JM Financial said Brent crude is likely to remain subdued at around $65 per barrel in the near term, at least until the US mid-term elections in November 2026, as Saudi Arabia aligns with the US administration’s preference for lower oil prices. 

 

In the medium term, however, crude is expected to stabilise around $70 per barrel, as persistently lower prices could hurt US shale capital expenditure and widen Saudi Arabia’s fiscal deficit.

 

Lower crude prices should continue to support oil marketing companies' marketing margins in the near term, although any sharp hike in excise duty on auto fuels remains a key risk. 

 

JM Financial noted that OMC valuations are currently 5-15 per cent above historical averages. Muted crude prices are also likely to cap near-term realisations for upstream companies such as Oil and Natural Gas Corporation and Oil India.

 

That said, the brokerage prefers Oil India from a medium-term perspective, citing a potential 15 per cent earnings compounding over the next two to three years, driven by expected cumulative oil and gas production growth of 20-25 per cent and benefits from the expansion of the Numaligarh Refinery from 3 million tonnes per annum to 9 million tonnes per annum.

IEA expects global oil surplus 

The International Energy Agency (IEA) expects a high global oil surplus of around 2.3 million barrels per day in calendar year 2025, as global supply is set to rise by about 3 million barrels per day, far outpacing demand growth of around 0.8 million barrels per day, JM Financial said. The surplus is likely to widen further to nearly 3.8 million barrels per day in calendar year 2026.

 

The surplus is being driven by Opec+ output increases and strong non-Opec+ supply growth, the brokerage said. Opec+ has raised output by about 1.3 million barrels per day between April and November 2025. In addition, the prospect of a peace deal between Russia and Ukraine, which could ease sanctions on Russia, has added to oversupply concerns, pushing Brent crude down to around $60 per barrel, the report said.   ===== 

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