India’s Oil & Gas sector took a sharp hit on Thursday, with heavyweights Reliance Industries Ltd (RIL) and Bharat Petroleum Corporation Ltd (BPCL) leading a broad-based sell-off. The Nifty Oil & Gas index fell by as much as 1.71% in early trade, reflecting investor anxiety over a wave of unfavorable geopolitical developments and policy shifts from the United States.
Mukesh Ambani-led RIL, India’s largest company by market capitalization, dropped 2%, while BPCL slipped 2.29%. Other major players like Hindustan Petroleum Corporation (HPCL), Indian Oil Corporation (IOC), and GAIL also saw declines ranging from 1% to nearly 3%. Out of the 15 index constituents, only Indraprastha Gas and Aegis Logistics managed to stay in the green.
What’s Fueling the Fire?
The sell-off was triggered by a series of announcements from US President Donald Trump, who unveiled a 25% tariff on Indian exports and hinted at penalties for India’s continued imports of Russian oil and arms. This move has raised alarm bells for Indian refiners, as Russian crude currently accounts for nearly 45% of India’s total oil imports.
Adding to the pressure, the US imposed sanctions on six Indian companies accused of trading in Iranian petroleum and petrochemical products. These include Alchemical Solutions, Global Industrial Chemicals, Jupiter Dye Chem, Ramniklal S Gosalia and Company, Persistent Petrochem, and Kanchan Polymers.
In a geopolitical twist, Trump also announced a new energy partnership with Pakistan, allowing joint exploration and development of oil reserves. He suggested that Pakistan could potentially export oil to India in the future, further complicating the regional energy dynamics.
Market Reaction
The broader market wasn’t spared either. The BSE Sensex dropped by 511.01 points (0.61%) to 80,970.85, while the NSE Nifty 50 fell by 148.25 points (0.60%) to 24,706.80. Analysts attributed the decline to geopolitical uncertainty, weak global cues, and foreign institutional investor (FII) outflows.
Among the worst-hit Oil & Gas stocks:
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HPCL: ↓ 2.74%
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IOC: ↓ 2.10%
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BPCL: ↓ 2.29%
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Gujarat State Petronet: ↓ 1.27%
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Adani Total Gas: ↓ 0.92%
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Mahanagar Gas: ↓ 1.35%
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GAIL: ↓ 1.13%
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Petronet LNG: ↓ 1.10%
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Castrol India: ↓ 0.97%
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Oil India: ↓ 0.92%
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ONGC: ↓ 0.58%
Only Aegis Logistics (+1.39%) and Indraprastha Gas (+0.19%) bucked the trend.
Global Ripples
The market jitters were compounded by broader global concerns. European and Asian indices traded lower, and crude oil prices remained volatile. Brent crude rose slightly by 0.32% to USD 69.40 a barrel, but the outlook remains uncertain amid shifting alliances and trade tensions.
Vinod Nair, Head of Research at Geojit Investments, noted, “Subdued corporate results and lacklustre global cues triggered a broad-based sell-off across domestic equities. Elevated valuations in large-cap stocks, coupled with significant net short positions held by FIIs, added to the downward pressure”.
Looking Ahead
The coming weeks will be crucial for the Oil & Gas sector. Investors will be watching for any retaliatory measures from India, potential shifts in import strategies, and further clarity on US sanctions. The sector’s dependence on Russian and Iranian crude makes it particularly vulnerable to geopolitical shocks.
For now, the message from the market is clear: uncertainty is the new normal, and energy stocks are caught in the crossfire.
Sources: Business Standard, Firstpost, Fortune India, Business Today
