HPCL, Indian Oil and BPCL fall up to 7% intraday as Brent oil surpass $81 per barrel; check details

Sectoral index NIFTY Oil & Gas dropped nearly 1% as most constituents traded in the red in the morning session. However, shares of upstream oil company Oil India Ltd bucked the trend, gaining up to 3% in early trade.

OMCs fall up to 7% amid firm international crude oil prices

Oil marketing companies (OMCs), led by Hindustan Petroleum, lost up to 7% as global benchmark Brent Crude increased by nearly 2% to trade above $81 per barrel.

Hindustan Petroleum dropped more than 7% to hit a low of ₹360.15 per share on the NSE. The stock later trimmed losses to trade at ₹370, down by 4.75% over the last close.

Adani Total Gas Limited fell by nearly 4% to hit a low of ₹652.6 per share before trading 3.35% lower at ₹658.45 at 10.40 am.

The country’s largest oil retailer, Indian Oil Corporation, also declined over 5% to a day low of ₹123.60 per share on the NSE.

BPCL, Gujarat Gas, Mahanagar Gas Ltd, GAIL, Petronet LNG, GSPL, and oil behemoth Reliance Industries also declined up to 1% in morning deals.

Upstream oil companies trade mixed

Upstream oil companies traded mixed in morning trade following a spike in Brent crude prices.

ONGC Ltd opened strong and hit a high of ₹268.60, up by 2%, in early deals. However, later its pared gains to trade down by 0.65% at ₹261.3 per share on the NSE.

Oil India Ltd shares spurted by 5% to hit a high of ₹478.65 on the NSE in early deals. The stock later trimmed gains to trade 0.75% higher at ₹459.25 per share.

Aegis Logistics was the lead gainer among NIFTY oil and gas shares, rising by 3.58% to a day high of ₹859.75 per share even as the benchmark Nifty50 dropped nearly half a percent. Aegis Logistics provides logistic solutions for the oil, gas, chemicals, and petrochemical industries.

How crude oil price rise impacts OMCs?

Global oil benchmark Brent Crude spurted nearly 2% to trade above $81 per barrel after the US imposed fresh sanctions on Russian oil. According to experts, the US sanctions are likely to affect Russian crude exports to top buyers China and India.

The broader sanctions target Russian producers Gazprom Neft and Surgutneftegas, as well as 183 vessels involved in transporting Russian oil.

Experts said that fresh sanctions targeting oil vessels would curb oil purchases by Indian OMCs, boost supplies from the Middle East, Africa, and the Americas, and increase freight costs.

Higher transportation costs and prices would affect Indian oil and gas marketers, who have been sourcing cheaper Russian oil. The inability to increase retail prices would also hit their margins.

Oil marketing companies mostly rely on purchasing crude oil from the international market. They refine the oil into various products and supply it to leading players across sectors. The rise in crude oil prices will increase the raw material or input cost for OMCs.