Nifty Oil & Gas index drops nearly 3% as Reliance Industries and other OMC stocks trade lower; here’s why

Shares of oil and gas stocks plunged on Tuesday, January 6, underperforming the main equity benchmark indices. The Nifty Oil & Gas index slipped nearly 3% to an intraday low of 11,891.05.

Except for four stocks out of 15 on Nifty Oil & Gas stocks, all the other scrips were trading lower. Reliance Industries (RIL) was the biggest laggard on the index, tumbling over 5% on Tuesday.

The fall in RIL stock price was witnessed following the company's denial of a report that claimed three vessels carrying Russian crude oil were heading to its Jamnagar refinery. In a statement, Reliance said its Jamnagar refinery has not received any cargo of Russian oil over the past three weeks and is not expecting any deliveries of Russian crude in January.

How other OMC stocks are performing

Further, Mahanagar Gas (-3.3%), HPCL (-2.5%), BPCL (-2.21%), GAIL India (-1.29%) and Indian Oil Corporation (-1.26%) were the other top losers on the Nifty Oil & Gas index.

Shares of Adani Total Gas (-1.11%), Castrol India (-0.59%), Gujarat State Petrone (-0.53%) and Indraprastha Gas (-0.3%) also fell on Tuesday.

Meanwhile, Aegis Logistics (1.78%), Petronet (1.77%), ONGC (1.17%) and Oil India (0.93%) were the only gainers.

US-Venezuela conflict impact

Market investors were also cautious following the Venezuela conflict after the US captured its president, Nicolás Maduro, with Donald Trump vowing to "run the country" until there is a "proper" transition of power.

Investors turned cautious about the sector after Trump announced plans to take control of Venezuela’s oil industry, saying US firms would revitalise operations after removing President Nicolas Maduro.

While the proposed move is unlikely to have an immediate impact on crude prices amid the current supply glut, analysts warn it could potentially disrupt global energy markets over the medium to long term.

FY27 outlook for the oil & gas sector

Varun Gogia, Assistant Vice President and Sector Head–Oil & Gas at ICRA, said crude oil prices are expected to average in the range of $60–70 per barrel in FY27, driven by muted global demand growth alongside rising supplies. He noted that even at these levels, the profitability of domestic crude producers should remain healthy, allowing them to maintain their capital expenditure plans.

Gogia further added that domestic petroleum, oil and lubricant (POL) consumption is likely to grow by 1–2%, while Singapore gross refining margins (GRMs) are expected to remain in the range of $4–5 per barrel. “The marketing margins on retail sales of auto fuels are expected to remain healthy owing to stable crude prices, and under recoveries in domestic LPG are expected to reduce,” he said.

ICRA expects natural gas consumption in India to grow 3-4% year-on-year, supported by increased offtake from refining, fertiliser and city gas distribution sectors.