RIL, BPCL lead market sell-off; here's why Oil & Gas stocks are falling

Oil & Gas shares:  Shares of Oil & Gas related companies came under pressure on Thursday, with the Nifty Oil & Gas index falling as much as 1.71 per cent in early trade. The decline was largely driven by a sharp sell-off amid escalating geopolitical tensions and unfavourable policy developments from the United States.  

 

Mukesh Ambani-led Reliance Industries, India’s largest company by market capitalisation, dropped 2 per cent, contributing significantly to the sector’s weakness.

 

Among the index constituents, only Indraprastha Gas and Aegis Logistics managed to trade in positive territory, while all other 13 stocks were in the red with Hindustan Petroleum Corporation (HPCL), and Indian Oil Corporation (IOC) falling the most. 

 

 

As of around 9:35 AM, HPCL was trading lower by 2.74 per cent, while IOC was down 2.10 per cent. Bharat Petroleum Corporation (BPCL) slipped 2.29 per cent, Gujarat State Petronet declined 1.27 per cent, and Adani Total Gas was down by 0.92 per cent. 

 

Mahanagar Gas traded lower by 1.35 per cent, GAIL (India) fell by 1.13 per cent, Petronet LNG declined 1.10 per cent, Castrol India was down by 0.97 per cent, Oil India dropped 0.92 per cent, and ONGC declined 0.58 per cent. In contrast, Aegis Logistics and Indraprastha Gas were the only two gainers in the index, trading up by 1.39 per cent and 0.19 per cent, respectively.

Why are Oil & Gas shares falling today?

The fall in the share prices of Oil & Gas related companies came after the US President Donald Trump announced a 25 per cent tariff on Indian exports, coupled with unspecified penalties on India's continued imports of Russian oil and arms. This raised concerns for Indian refiners and oil marketing companies, as Russian crude now accounts for nearly 45 per cent of India’s total oil imports.  

 

In a separate announcement, Trump also announced a new energy partnership with Pakistan that would allow the US and Pakistan to jointly explore and develop oil reserves within Pakistan. He further said that Pakistan could potentially export oil to India in the future.  

 

Adding to the uncertainty, the US imposed sanctions on six Indian companies accused of trading in Iranian petroleum and petrochemical products. The sanctioned entities include Alchemical Solutions, Global Industrial Chemicals, Jupiter Dye Chem, Ramniklal S Gosalia and Company, Persistent Petrochem, and Kanchan Polymers. 

Broader markets tumble

The impact of these developments was not limited to the Oil & Gas space. Broader market sentiment remained weak as investors reacted to the unfolding geopolitical uncertainty. The BSE Sensex declined by 511.01 points, or 0.61 per cent, to trade at 80,970.85, while the NSE Nifty 50 was down by 148.25 points, or 0.60 per cent, at 24,706.80.