Reliance, BPCL to HPCL: Shares of oil marketing companies plunge up to 6% as crude oil prices rise on US-Israel-Iran war

The shares of oil marketing companies (OMC) tanked on Monday as the Indian stock market crashed today as the ongoing war in the Middle East led to a sharp spike in crude oil prices.

Indian Oil Corporation (IOC) share price cracked as much as 5.03%, Hindustan Petroleum Corporation Ltd (HPCL) shares declined as much as 5.31% and Bharat Petroleum Corporation Ltd (BPCL) shares fell 6.09%. Reliance Industries share price declined over 3%.

On the contrary, shares of oil producers rallied. Oil and Natural Gas Corporation (ONGC) share price jumped 4.73%, and OIL India shares surged 4.43%.

The fall in OMC stocks mirrors the broader trend in the Indian stock market today. The frontline indices, Sensex and Nifty 50, were trading sharply lower by more than 1% each.

OMC stocks declined as the crude oil prices spiked by the most in four years, as the US-Israeli war against Iran plunged the global crude market into turmoil. Brent rallied as much as 13% to above $82 a barrel, the highest level since January 2025, before paring the bulk of its gain.

Brent crude oil prices were up 4.82% at $76.38 a barrel, while the US West Texas Intermediate (WTI) crude futures rallied 4.31% to $69.91.

Israel launched fresh airstrikes targeting Tehran and widened its military offensive on Monday to include positions linked to Iran-backed Hezbollah militants in Lebanon, as US President Donald Trump indicated that the joint US-Israeli strikes against Iranian targets could extend for several weeks.

The conflict intensified over the weekend following coordinated US-Israel strikes on Iran that killed Ayatollah Khamenei, marking a sharp escalation in tensions across the Middle East.

Media reports have since pointed to disruptions in shipping activity through the Strait of Hormuz, a critical chokepoint that accounts for nearly 20% of global oil flows and more than 40% of India’s crude imports. However, there is no confirmed indication of a complete and sustained closure. For markets, the key variable remains the likelihood and duration of any supply disruption.

High Oil Prices Impact on India

Analysts expect the sustained broader regional conflict in the Middle East could take crude oil prices beyond $100 per barrel. For India, the impact is direct as every $1 rise in crude increases the annual import bill by ~$2 billion, putting pressure on the trade balance.

“Markets are likely to move from earnings-driven to oil-driven trading in the near term. Upstream energy and defence may see relative support, while oil-sensitive sectors such as OMCs, paints, tyres, aviation and chemicals face margin pressure,” JM Financial said.

Foreign brokerage firm JPMorgan said that with the rising crude oil prices, diesel cracks can also increase, which will be good for Reliance Industries and standalone Indian refining stocks.

A spike in natural gas prices can hurt margins for city gas companies, such as Mahanagar Gas, Indraprastha Gas and Gujarat Gas, and increase the attractiveness of GAIL India’s HH purchase contracts, said the brokerage firm.

On the fiscal response, analysts do not expect the government to cut excise duties to absorb part of the burden faced by OMCs.

Emkay Global’s energy team highlighted that OMCs remain relatively well cushioned, with earnings from other business segments helping offset oil marketing losses, reducing the likelihood of a government taking the hit on its books at this point.

“Assuming a ~$10 per barrel deviation from the baseline assumption of $65 per barrel, the eventual balance sheet and fiscal and inflationary impact will hinge on how the burden is shared between the government, OMCs, and end-consumers,” said Madhavi Arora, Lead – Economist at Emkay Global Financial Services Ltd.

On argument that current Iran conflict could also be short-lived (as with that in June 2025), JPMorgan said that the medium-term investors can look to use the near-term volatility to add OMC stocks into a correction and book profits on upstream names like ONGC.

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