Why are oil and gas stocks falling today? Here are the key factors

Shares of oil and gas firms slipped as much as 3% during the morning trade as investors remained nervous after the trade tariffs begin on Tuesday, March 4.

The increase is the first since 2022 from OPEC+, which includes the Organisation of the Petroleum Exporting Countries, plus Russia and other allies.

Brent futures fell $1.19, or 1.6%, to settle at $71.62 a barrel, while US West Texas Intermediate (WTI) crude fell $1.39, or 2.0%, to settle at $68.37. Those were the lowest closes for Brent since December 6 and WTI since December 9, 2024.

Meanwhile, stock investors got cautious as US President Donald Trump on Monday said that 25% taxes on imports from Mexico and Canada would start from March 4 without any delay. This sparked renewed fears of a North American trade war that already showed signs of pushing up inflation and hindering growth.

On Monday, Trump also temporarily suspended, with immediate effect, the delivery of all American military aid to Ukraine, just days after an unprecedented showdown with Ukrainian President Volodymyr Zelensky in the Oval Office.

Shares of oil and gas traded under pressure since morning trade. The Nifty Oil and Gas index was one of the biggest losers among sectors, falling over 1.5% during the morning trade.

However, the BSE Oil and Gas index has tumbled 4.66% on Tuesday morning.

Among the sectors, ONGC and BPCL were two of the biggest laggards, declining 3.28% and 2.44%, respectively.

Among losers were Indraprastha Gas (-1.5%), Mahanagar Gas (-1.21%), Petronet (-0.98%), GAIL (0.89%) and Gujarat Gas (0.44%).

The equity indices have been under pressure since September 2024, as foreign investors have been pulling out of the domestic market.

Meanwhile, the Nifty Oil and Gas index has declined almost 30% since September 2024. Year-to-date the sector is down 11.62%.

Crude oil derivatives account for around 25%-30% of the raw material cost of paint companies. Any spike in crude oil prices inflates the input cost and squeezes their margins.

Leading paint manufacturers Asian Paints, Berger Paints India, Indigo Paints and Kansai Nerolac Paints fell as much as 2% in the morning trade.

Tyre makers like Apollo Tyres, Goodyear India and MRF declined up to 2% on Tuesday due to falling crude oil prices.