Shares of major public sector oil marketing companies (OMC) came under heavy selling pressure on Thursday as Brent crude prices climbed above the $104-a-barrel mark, raising concerns over the impact of higher input costs on refiners and fuel retailers.
Hindustan Petroleum Corporation Ltd (HPCL) share price fell as much as 4.94% to Rs 326.10, making it one of the biggest losers among the major oil marketing companies. Bharat Petroleum Corporation Ltd (BPCL) declined 4.62% to Rs 283.25, while Indian Oil Corporation dropped 3.48% to 52-week low of Rs 125.95 apiece on the BSE.
The decline came amid a broader weakness in the oil and gas sector stocks. Reliance Industries share price fell 2.78% to Rs 1,173.00, while MRPL and Chennai Petroleum Corporation shares slipped up to 4%.
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The fall in OMC stocks came as crude oil prices surged over 3%, with the Brent crude futures rising to $104 a barrel.
For Indian oil marketing companies, a sustained rise in crude prices can put pressure on refining and marketing margins, particularly if domestic fuel prices do not adjust in line with the increase in international crude costs.
Why Is Crude Oil Rising?
Brent crude futures rallied 3.79% to $104.00 a barrel, while US West Texas Intermediate crude gained 3.59% to $91.45 a barrel, amid concerns over supply disruptions following intensifying attacks on oil tankers in the Gulf and the Strait of Hormuz.
The latest rise in crude prices also comes amid weather-related production disruptions in the US Gulf of Mexico. Oil producers including Shell and Chevron have paused operations as Hurricane Isaias approaches the region.
Furthermore, US crude inventories also fell by 3.2 million barrels in the week ended Oct. 2, exceeding expectations for a decline of 1.7 million barrels,
For Indian oil marketing companies, a sustained rise in crude prices can put pressure on refining and marketing margins, particularly if domestic fuel prices do not adjust in line with the increase in international crude costs.
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