HPCL, BPCL shares gain up to 4% to hit fresh 52-week high as global crude prices fall

Brent crude prices have declined in the last few days and have slipped nearly 7% in the last five sessions to nearly $76 per barrel. According to reports, the decline is due to a slowdown in demand from China, the world's largest oil importer.

Additionally, the Organization of Petroleum Exporting Countries and its allies (OPEC+) plan to go ahead with an oil output hike in October, which is also likely to put pressure on oil prices. According to reports, eight members of the OPEC+ plan to increase production by 1,80,000 barrels per day (bpd) as part of their strategy to bridge the 2.2 million bpd cuts made earlier this year while keeping other reductions in place until the end of 2025, according to a Reuters report.

A fall in crude oil prices benefits oil marketing companies (OMCs) as it reduces the input cost and also gives them flexibility for higher margins, allowing them to increase the prices of refined products like petrol and diesel. OMCs are also likely to benefit from inventory gains as they replenish stocks at lower prices, which in turn can boost demand, increasing revenues for these players.

Earlier on August 31, the government announced that it has cut the windfall tax on domestically produced crude oil to ₹1,850 per tonne from ₹2,100 per tonne. The new rule came into effect on August 31, 2024.

Windfall tax is levied in the form of Special Additional Excise Duty (SAED). While the SAED on domestically produced crude has been cut, the tax imposed on the export of diesel, petrol and jet fuel or ATF, has been retained at 'nil'. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.

Shares of BPCL closed flat at ₹358.5 apiece, up 0.24%, on the NSE, while the HPCL stock settled 2.12% higher at ₹427.95 apiece.