OMC stocks surge up to 5% as crude falls below $100; BPCL, HPCL lead gains

Oil marketing company (OMC) stocks rose sharply on Wednesday, climbing as much as 5 per cent in intraday trade after global crude oil prices slipped below the $100 per barrel mark. The decline in oil prices triggered buying in downstream fuel retailers, while upstream oil producers came under mild pressure.

At 11:56 AM IST, Bharat Petroleum Corporation Limited (BPCL) was trading at Rs 307.25, up 4.88 per cent. Hindustan Petroleum Corporation Limited (HPCL) gained 5.11 per cent to Rs 367.25, emerging as one of the strongest performers in the pack. Indian Oil Corporation (IOC) also advanced 3.18 per cent to Rs 145.57.

The move in OMC stocks came as investors reacted to improving near-term margin expectations. With crude prices easing faster than retail fuel adjustments, refiners tend to benefit from a temporary expansion in marketing spreads. That shift has been reflected in buying interest across the sector.

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Upstream oil names, however, moved in the opposite direction. Oil and Natural Gas Corporation (ONGC) and Oil India slipped as lower crude prices directly impact realisations per barrel, weighing on earnings outlook for exploration-linked companies.

Broader markets remained firm through the session, with the Sensex trading higher. Within the energy space, though, there was a clear split — downstream stocks gained on margin optimism, while upstream counters lagged on pricing pressure.

Crude extends fall on supply hopes

Brent crude declined for a second straight session, falling 52 cents or 0.55 per cent to $94.27 per barrel after a sharp 4.6 per cent drop in the previous trading session.

Sentiment in the oil market weakened on expectations that US–Iran diplomatic talks could restart. Traders are pricing in the possibility that easing tensions in West Asia may gradually bring back more supply, particularly through key shipping routes like the Strait of Hormuz.

Any reduction in geopolitical risk typically removes the “risk premium” embedded in crude prices, leading to softer global benchmarks.

Windfall tax hike adds domestic layer

On the domestic front, sentiment was also shaped by changes in fuel export taxes under the Special Additional Excise Duty (SAED) regime.

The government has raised export duty on diesel to Rs 55.5 per litre from Rs 21.5 per litre earlier, while aviation turbine fuel (ATF) has been increased to ₹42 per litre from Rs 29.5 per litre. Petrol exports remain outside the windfall tax structure for now.

The intent, officials say, is to manage domestic fuel availability and discourage excessive exports when global markets remain volatile.

Brokerage Nomura said the tax framework is likely to be reviewed every fortnight depending on crude trends and supply conditions. It added that the changes could indirectly support OMCs, as standalone refiners may adjust pricing in line with export-linked benchmarks, improving procurement dynamics for marketing companies.

HPCL could be a relative beneficiary, Nomura noted, given its dependence on third-party diesel sourcing.

Market view

Overall, the fall in crude prices, expectations of better refining margins, and policy support helped drive strong buying in OMC stocks. Upstream producers, meanwhile, stayed under pressure as weaker crude realisations weighed on sentiment, reinforcing the divergence within the oil sector.