BPCL, HPCL, IOC Shares Decline Amid Fuel Price Hike as US-Iran Tensions Escalate

Oil Marketing Companies Struggle Amid Elevated Crude Prices

Shares of major oil marketing companies continued to face pressure in early trade on Friday, despite a recent hike in petrol and diesel prices across the country. The increase of Rs 3 per litre fell short of market expectations, contributing to a subdued investor sentiment.

The key stocks of Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited, and Indian Oil Corporation Limited witnessed a decline in morning trade. Bharat Petroleum Corporation Limited fell 2.02 per cent to Rs 289.05, Hindustan Petroleum Corporation Limited declined 2.17 per cent to Rs 369.35, while Indian Oil Corporation Limited slipped 1.65 per cent to Rs 137.94.

Oil marketing companies (OMCs) raised petrol and diesel prices by over Rs 3 per litre across major cities on May 15, marking the first fuel price revision in more than four years. This move was necessitated by state-run retailers struggling with mounting losses amid elevated global crude oil prices.

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Market watchers are now speculating that further fuel price increases cannot be ruled out if crude prices remain at current levels. The pressure on fuel retailers has been building for weeks, with brokerage firm Kotak Institutional Equities estimating that refiners were facing an additional burden of nearly Rs 27,000 crore every month due to persistently high crude prices.

India, which imports nearly 85 per cent of its crude oil requirement, remains highly exposed to global energy disruptions. Crude prices have surged sharply in recent months due to escalating tensions in West Asia and supply concerns around the Strait of Hormuz, a critical global oil transit route. International benchmark oil prices are currently hovering near $107 per barrel.

Union Petroleum Minister Hardeep Singh Puri recently stated that Indian oil companies are currently losing nearly Rs 1,000 crore every day, with total under-recoveries potentially reaching Rs 1,98,000 crore. The ongoing US-Israel-Iran conflict has further exacerbated the situation, with global crude prices surging beyond $120 per barrel before easing to the $100-$105 range due to severe disruptions and near-closure fears around the Strait of Hormuz.

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