BPCL, HPCL, IOC crack up to 5% as oil prices soar on West Asia flare-up

Shares of Indian Oil Marketing Companies (OMCs) continued to face selling pressure for the second straight session after oil prices soared as escalating West Asia tensions rattled investor sentiment.

 

Bharat Petroleum Corp. (BPCL) stock fell as much as 4.5 per cent to ₹357.6 per share. Shares of Indian Oil Corp (IOC) and Hindustan Petroleum Corp (HPCL) slid 4.3 per cent and 5 per cent, respectively. The Nifty Oil and Gas index was down 3.2 per cent. 

 

As of 11:05 AM, BPCL stock was trading 4.1 per cent lower compared to a 1.7 per cent fall in the Nifty50 index. Shares of IOC and HPCL were down 3.9 per cent and 4.2 per cent. In the last two sessions, shares of BPCL and HPCL have fallen by 7.2 per cent and 8.1 per cent, respectively, while IOC has fallen by 8.6 per cent.

 

 

Brent crude oil prices rose above $82 a barrel after rallying about 12 per cent over two days, the biggest gain since 2020, according to Bloomberg. Trump said the US will provide insurance guarantees and naval escorts to ensure safe passage for vessels through the Strait of Hormuz. 

 

Analysts at JM Financial said that limited retaliation may lift prices by $5-10 per barrel, direct damage to Iranian oil infrastructure by $10–12, disruption in the Strait of Hormuz above $90, and a broader regional conflict beyond $100 per barrel. Upstream energy and defence may see relative support, while oil-sensitive sectors such as OMCs, paints, tyres, aviation and chemicals face margin pressure, the brokerage said. Crude remains the key macro variable for Indian equities under the current escalation scenario, it said.

 

OMCs are particularly vulnerable, as elevated crude prices can compress refining margins, increase operating and working capital requirements, and lead to higher borrowing costs and debt levels, analysts said. Nearly 20 per cent of global oil flows through the Strait of Hormuz, and over 40 per cent of India’s crude imports transit this route, creating material exposure.

 

Investor sentiments continued to be in a risk-off mood as the US and Israel fired missiles across Iran last week, with the Supreme Leader Ayatollah Ali Khamenei being killed. Iran responded with strikes against Israel, as well as US bases and other targets in states including Saudi Arabia, Qatar, the United Arab Emirates (UAE), Kuwait and Bahrain. 

Kotak Securities has maintained its negative stance on oil marketing and gas companies, citing an unfavourable risk-reward outlook amid escalating geopolitical tensions and rising cost pressures.

 

Sumit Pokharna, Vice President - Fundamental Research at Kotak Securities, said the risk-reward currently skews negative given elevated geopolitical risks, supply-side uncertainties, rising commodity and logistics costs, and the likelihood of margin compression under regulated retail fuel pricing. He also flagged limited strategic buffers across the sector.

 

The brokerage has retained its Sell ratings on oil marketing companies Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited. Among gas players, Kotak Securities continues to recommend Sell on GAIL (India) Limited, Petronet LNG Limited, Indraprastha Gas Limited and Mahanagar Gas Limited.

   

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