BPCL, HPCL, IOC Shares Rise After Brent Slips Below $59 Per Barrel

Shares of major Indian oil marketing companies rallied on Monday as Brent crude prices slid below the $59 per barrel mark — their lowest level since February 2021. Brent has declined by nearly 4.5% in recent trade and has now fallen 20.8% year-to-date, marking the commodity’s worst annual start since 2020.

Hindustan Petroleum Corp. led the rally, jumping 6.27% to Rs 409.20 — its highest level since Jan. 6. Bharat Petroleum Corp. and Indian Oil Corp. also surged over 4%, reaching six-month highs of Rs 325.45 and Rs 149.60 respectively.

Other refiners also gained, with Chennai Petroleum Ltd. rising 3.12% to Rs 636.95 and Mangalore Refinery & Petrochemicals Ltd. climbing 3.99% to Rs 139.35.

The ongoing weakness in Brent is attributed to excess global supply amid concerns over weakening demand. In a surprise April decision, OPEC+ announced it would unwind previous voluntary production cuts, agreeing to raise output by 411,000 barrels per day in June — the second straight monthly increase.

At the same time, escalating global trade tensions, particularly new tariffs imposed by former US President Donald Trump, have raised fears of a potential recession, further dampening demand expectations.

This supply-demand imbalance has pushed oil prices lower, creating favourable conditions for downstream companies such as HPCL, BPCL, and IOC. Lower crude prices generally boost refining margins and improve marketing profitability, enabling these firms to earn more per unit sold.

Conversely, the decline is a headwind for upstream players like Oil and Natural Gas Corp. and Oil India, whose revenues are directly linked to the selling price of crude oil.

Beyond the oil sector, falling crude prices are seen as a positive for aviation, paints, chemicals, cement, tyres, lubricants, and manufacturing — all industries where oil derivatives are key input costs.

However, analysts caution that these benefits will only materialise if oil prices remain at current levels, as short-term swings are often neutralised by hedging practices.

Yes Securities notes that the gradual production increase from June 2025 by OPEC+ could enhance refining margins, boosting profits for OMCs. It ranks HPCL as its top sector pick, followed by BPCL and Chennai Petroleum, while warning of earnings pressure on upstream firms like ONGC and Oil India.