BPCL, Indian Oil, IndiGo: Oil-linked stocks gain as crude prices drop to $85/barrel; what investors should know

Shares of oil-linked stocks and oil marketing companies (OMCs) were trading higher during the morning market hours on Wednesday, August 26, as investors focused on the third consecutive day of declining crude oil prices in the global market amid mixed cues from the West Asia conflict.

NSE data showed that the sectoral benchmark index, Nifty Oil & Gas, recorded key support from downstream oil-linked stocks, gaining 0.3% to touch an early market high of 11,248.40 points on Wednesday, compared to 11,214.90 points at the previous equity market close.

While oil downstream companies, aviation stocks, and paint stocks were gaining momentum, on the other hand, oil upstream companies like ONGC and Oil India were among the losers during the trading session on August 26.

The global benchmark Brent crude oil prices declined more than 8% in the last three days, from $92.67 per barrel (bbl) as of the market close on August 21, down to $85.01 per bbl during Wednesday’s intraday session, according to Investing.com data.

Latest reports suggest that Iran and Oman have proposed a joint scheme to set up a temporary shipping pathway and launch a demining effort at the Strait of Hormuz. However, the deal is yet to be finalised.

This comes amid America’s sanctions on Iran, as the Western nation has begun its campaign to tighten sanctions on Tehran over aviation, cryptocurrency, gold, shipping, and technology.

Oil drops 2.5% today

Brent crude oil prices declined 2.5% to touch an intraday low of $85.01 per bbl during the trading session on August 26, in comparison to $87.27 per bbl at the previous commodity market close, as per the exchange data.

While the US-based West Texas Intermediate (WTI) crude prices lost 2.7%, dropping to $80.08 per bbl on Wednesday’s market, compared to $82.36 per bbl at the previous market close levels.

After touching a monthly high last week of around $93 per bbl for August 2026, crude oil prices witnessed a pullback as developments in West Asia turned from military attacks to economic sanctions imposed by the United States on Iran, amid hopes of trade normalisation via the key maritime routes.

Oil-linked stocks in focus today

How do oil prices impact stocks?

Global crude oil prices impact stocks in several ways, as upstream companies benefit from elevated rates in the market, while oil marketing companies (OMCs), paint companies, and aviation companies, among others, benefit from lower oil prices.

Oil upstream companies like ONGC, Oil India, among others, are the ones benefiting from higher oil prices in the market, as elevated rates support revenue gains in a period, further improving profits.

However, a fall in crude prices can impact the firms, as these companies will be selling their production at a lower market price.

In contrast, oil downstream companies like Indian Oil, BPCL, HPCL, among others, benefit from lower crude oil prices, as falling input costs translate into margin benefits in a particular period. A higher cost of oil in the market increases the raw material purchase for these companies.

Other sectors like tyre manufacturers, aviation companies like IndiGo, and paint companies like Asian Paints also benefit from the lower oil prices in the market, as these firms use oil or crude-linked derivatives for their core production or operation.