OMC stocks jump up to 5% as fuel prices rise for 4th time; how IOC, BPCL, HPCL stand to gain

When last seen, shares of Indian Oil Corporation were up 3.5% at ₹144.35 apiece on the NSE, while HPCL was up 5%. Bharat Petroleum Corporation was up 3.8% on the NSE.

With the latest revision, cumulative increases in petrol and diesel prices have nearly touched ₹7.5 per litre since fuel price revisions resumed on May 15 after a prolonged freeze, stoking concerns over inflationary pressures and higher transportation costs across the economy.

The latest revision pushed petrol prices up by ₹2.61 per litre and diesel by ₹2.71 per litre, PTI reported, citing industry sources.

Petrol prices were raised to ₹102.12 a litre in Delhi from ₹99.51 previously, while diesel rates were increased to ₹95.20 per litre from ₹92.49.

The back-to-back increases follow a prolonged freeze in retail fuel prices and come amid elevated crude oil prices in the global market, tightening refining margins, and a weaker rupee, which have sharply raised the cost of imports.

Petrol and diesel prices were increased on May 15 by ₹3 per litre each, and on May 19 by 90 paise a litre. This was followed by an 87-paise per litre increase in petrol and a 91 paise hike in diesel rates on May 23.

After Monday's increase, petrol at PSU pumps in Mumbai now costs ₹111.21 per litre and diesel ₹97.83, while prices in Kolkata rose to ₹113.51 and ₹99.82, respectively. In Chennai, petrol is priced at ₹107.77 and diesel at ₹99.55.

Prices vary across states due to local taxes.

State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) together control 90% of India's fuel market.

The back-to-back increases come after global crude oil prices surged more than 50% since late February following US-Israeli strikes on Iran and disruptions to shipments through the Strait of Hormuz, a critical global oil transit route.

Crude oil prices fall sharply

Crude oil prices were trading more than 5% lower in the early trade on Monday after US President Donald Trump indicated that talks with Iran to reopen the Strait of Hormuz are advancing, though he said the US would not rush a deal.

“The negotiations are proceeding in an orderly and constructive manner, and I have informed my representatives not to rush into a deal in that time is on our side,” Trump said Sunday in a social media post.

At the time of writing this article, WTI crude was trading 5.40% lower at $91.38/bbl, while Brent crude traded 5.09% lower at $98.23/bbl.

Impact on OMCs

A fourth consecutive hike in petrol and diesel prices, combined with a sharp fall in global crude oil prices, is positive for Indian oil marketing companies (OMCs).

This is because their raw material cost — crude oil — declines, while the selling price of petrol and diesel rises.

The wider gap between input costs and retail fuel prices improves their marketing margins, boosting profitability.

Lower crude prices also reduce inventory losses and ease pressure on working capital, strengthening the overall earnings outlook for OMCs.