Fuel price hikes spark rally in oil & gas stocks; HPCL, BPCL, IOCL surge up to 4%

Shares of oil and gas companies witnessed strong buying interest in Monday’s trade, May 25, with the Nifty Oil & Gas index rising over 1.6 per cent after another hike in petrol and diesel prices lifted sentiment around oil marketing companies (OMCs), even as global crude oil prices declined sharply.

At around 12:49 pm, the Nifty Oil & Gas index was trading at 11,514.85, up 142.55 points or 1.25 per cent.

OMCs lead rally in oil & gas pack

Among the top gainers were oil marketing companies. Hindustan Petroleum Corporation (HPCL) gained 4.11 per cent, while Bharat Petroleum Corporation (BPCL) rose 3.5 per cent. Indian Oil Corporation (IOCL) advanced 3.18 per cent.

Other stocks in the sector also traded higher. GAIL gained 3 per cent, while Indraprastha Gas, Petronet LNG and Aegis Vopak Terminals rose over 2 per cent each.

Shares of Mahanagar Gas, Aegis Logistics, Adani Total Gas, Chennai Petroleum Corporation, Reliance Industries and Castrol India were trading higher by up to 1.8 per cent.

However, upstream companies remained under pressure. Oil and Natural Gas Corporation (ONGC) declined 1.21 per cent, while Oil India slipped 2.31 per cent.

Petrol, diesel prices hiked again

The rally in OMC stocks came after petrol and diesel prices were increased again on Monday, marking the fourth hike in less than two weeks.

According to industry sources, petrol prices were raised by Rs 2.61 per litre and diesel prices by Rs 2.71 per litre.

With the latest revision, cumulative increases in fuel prices have nearly touched Rs 7.5 per litre since revisions resumed on May 15 after a prolonged freeze.

In Delhi, petrol prices rose to Rs 102.12 per litre from Rs 99.51 earlier, while diesel prices increased to Rs 95.20 per litre from Rs 92.49.

Market sees relief on under-recovery concerns

Sourav Choudhary, Managing Director at Raghunath Capital, said the rebound in OMC stocks reflects relief that the government is unlikely to allow sustained losses for fuel retailers.

According to Choudhary, the Street was earlier pricing in a steep Rs 15-20 per litre hike in domestic fuel prices amid elevated crude oil prices. Instead, the government opted for calibrated increases, beginning with around Rs 3 per litre followed by smaller hikes over the last 10 days.

“This gradual pricing action signals a clear intent to protect OMC balance sheets from prolonged losses, which were estimated at nearly Rs 1,000 crore per day at one stage,” he said.

Crude oil prices fall on US-Iran deal hopes

Meanwhile, crude oil prices declined sharply in global markets amid optimism around a possible US-Iran agreement.

Brent crude fell around 4 per cent to $99 per barrel, while WTI crude declined 4.5 per cent to $92.5 per barrel. Earlier in the session, oil prices had dropped nearly 6 per cent to two-week lows.

The decline followed comments from Donald Trump, who said negotiations with Iran were progressing “in an orderly and constructive manner,” raising hopes of easing geopolitical tensions and improved supply conditions in global oil markets.