BPCL, IOCL to HPCL: OMC stocks under pressure as crude oil prices extend gain on US-Iran tensions

OMC stocks: Shares of oil marketing companies (OMCs) faced selling pressure on Thursday, February 12, as crude prices extended gains to a second day amid escalating tensions between the US and Iran.

Shares of Bharat Petroleum Corporation Limited (BPCL) declined as much as 2.20% to ₹379.05 on the BSE. Meanwhile, Indian Oil Corporation (IOC) shares fell 1.54% to ₹178.50 apiece. Another PSU oil stock, Hindustan Petroleum (HPCL), shed 1.52% to ₹454.80.

Any jump in crude oil prices raises the input costs for OMCs, which has a bearing on their margins.

Explaining the reason behind today's fall, Abhinav Tiwari, Research Analyst at Bonanza, said that even a small increase in crude can impact sentiment because OMC profitability is highly sensitive to marketing margins. If crude rises and retail fuel prices remain unchanged, margins can quickly shrink, he opined.

Furthermore, some concerns around India sourcing crude from Venezuela also persist. "Venezuelan crude is heavier and more complex to refine. Although it may be available at a discount, higher processing costs and weak product spreads can pressure margins in the short term," Tiwari added.

Oil prices rise on US-Iran tensions

Supply disruptions fears amid US and Iran tensions have led to the latest spike in crude oil prices. The Brent crude futures gains 0.39% to $69.67 barrel, and WTI crude oil added 0.45% to $64.92. Both benchmarks built on a nearly 1% gain seen in the last trading session.

According to a Reuters report, US President Donald Trump said they have not reached a "definitive" agreement on how to move forward with Iran, but insisted negotiations with Tehran would continue.

Meanwhile, on Tuesday, Trump said he was considering sending a second aircraft carrier to the Middle East if a deal is not reached with Iran. A hefty build in US crude inventories has capped price gains.

OMC stocks up 4-9% in February so far

Despite today's pullback, all three OMC stocks remain in the green on a month-to-date basis, rising 4%-9%, as the government refrained from raising excise duty on retail fuel in the Union Budget 2026.

According to global broking firm UBS, as quoted by Moneycontrol, this development has removed a key near-term overhang for OMC stocks and is supportive of marketing margins.

The brokerage flagged higher power sector capex and incentives for clean energy, carbon capture and storage as positives for the broader energy value chain, the report stated.

“There were also expectations of strong FY26 earnings, with estimates suggesting a sharp jump in operating profits supported by healthy margins and crude prices staying around the USD 65-70 per barrel range. Earlier, crude prices had corrected, which boosted margins and reduced LPG under recoveries, supporting the stock prices," the Bonanza analyst added.

Going ahead, Tiwari expects near-term volatility is likely to persist. However, he believes that as long as crude stays in a manageable range and there is no major policy intervention, the medium-term earnings outlook remains stable.

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