Shares of India's state-run oil marketing companies (OMCs) Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd, dropped nearly 2% to trade in red on Thursday, June 11, after global crude oil prices climbed to $95 per barrel-mark. This comes after US and Iran were locked in fresh military engagements comprising the ceasefire deal negotiations. US hit Iran across multiple target sites and Tehran retaliated by launching strikes on 18 US military bases.
The fresh escalation sent benchmark Brent crude and US West Texas Intermediate higher, extending gains from the previous session. Shares of IOCL, BPCL, and HPCL opened lower and traded in red amid a volatile sentiment across the domestic frontline indices. On the NSE, shares of IOCL traded 1.14% lower at Rs 135.32, BPCL traded 1.70% lower at Rs 283.70, and HPCL shares were last down 2.27% at Rs 365.80 apiece.Frontline indices opened lower, with Nifty 50 and Sensex declining in early trade.
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Crude oil spike weighs on OMCs
NSE Nifty 50 fell 0.6% to 23,081. BSE Sensex dropped 0.63% or 464 points to 73,518.75. The downward trend comes as high crude oil prices raised concerns over prolonged disruption to energy supplies. Meanwhile, Tehran declared the Strait of Hormuz closed. WTI July futures rose 2.94% to $92.68 per barrel in the morning session. Brent August futures further gained 2.52% to $95.45 per barrel. High crude oil prices severely compress the marketing margins and profitability of India's state OMCs.
The Strait of Hormuz blockade has shocked energy markets as the Gulf area carries a fifth of the world's crude oil and liquefied natural gas. Apart from the US-Iran strikes, crude oil prices were also supported by data from the US Energy Information Administration which showed US crude stocks fell sharply last week as oil refiners scrambled to fill supply gaps caused by the Middle East war. US crude inventories fell by 7.2 million barrels in the week ended June 5, a far bigger draw than the four million barrels expected by analysts in a poll conducted by news agency Reuters.
ALSO READ: Govt Forgoes Rs 1.23 Lakh Crore To Support OMCs After Petrol, Diesel Duty Cuts: Sources
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