OMCs Soar Up to 5% as Crude Oil Tanks on Middle East Ceasefire; Oil India, ONGC Slip

Shares of India’s top oil marketing companies (OMCs)—Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL)—rallied up to 5% in early trade today, after international crude oil prices plunged more than 7%. The sharp drop in oil came as US President Donald Trump announced a likely ceasefire between Israel and Iran, cooling fears of further escalation in the Middle East.

 

In stark contrast, upstream oil explorers such as Oil India and ONGC, which had benefited from the recent crude rally, saw their shares fall as investors booked profits amid the sudden reversal in oil prices.

 

Key Highlights

Crude Oil Plunges: Brent crude futures tumbled $5.53 (7.2%) to $71.48 per barrel, while WTI fell equally to $68.51 per barrel, following the ceasefire announcement.

 

OMC Shares Rally:

 

Upstream Stocks Dip:

Oil India dropped 4.85% to ₹450.35

ONGC slipped 3.06% to ₹243.70

 

Reason for the Rally: Lower crude prices benefit OMCs by reducing input costs and boosting marketing margins, especially when retail fuel prices remain steady.

 

Upstream Companies Lose Out: Oil explorers like Oil India and ONGC typically gain from high crude prices due to fixed costs and higher realization per barrel. Falling prices now pressure their margins.

 

Market Sentiment: The sharp reversal in crude prices brought immediate relief to OMCs, which had been under selling pressure last month as oil surged on geopolitical fears.

 

Market Context

The ceasefire announcement and Iran’s measured military response avoided any disruption to vital oil infrastructure or shipping routes, notably the Strait of Hormuz. This reassured traders and triggered the sharp selloff in crude, directly benefiting downstream companies like IOC, BPCL, and HPCL.

 

Brokerages note that unless Brent crude averages above $75 per barrel, OMC earnings should remain resilient, aided by steady margins, lower global LPG prices, and ongoing government subsidy support.

 

Source: Economic Times, News18, Moneycontrol, Samco