IOC, HPCL, BPCL Shares Rise As Crude Oil Prices Fall

Shares of oil marketing companies moved higher on Wednesday as crude oil prices fell, with Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) gaining up to 3% in intraday trade.

GAIL also traded higher, while Petronet LNG, Indraprastha Gas and Reliance Industries were among the other oil and gas stocks that advanced during the session.

At 12:48 PM, the IOC share price stood at ₹134.80 on the National Stock Exchange (NSE), up 2.64% from the previous session’s closing. At the same time, HPCL share price stood at ₹355.35, up 1.72%.

The move was not seen across the entire sector. ONGC shares fell around 1%, while Oil India declined nearly 3%.

Crude Oil Prices Fall 2.5%

Brent crude was trading near $103 a barrel on Wednesday morning after oil prices dropped 2.5% on Tuesday. The decline came as oil supplies from the Middle East showed signs of recovering after Saudi Arabia resumed shipments from its Red Sea port of Yanbu.

The port gives Saudi Arabia an alternative route for sending oil that does not pass through the Strait of Hormuz. The return of these shipments has eased some of the supply concerns that had pushed crude prices higher during the conflict in the region.

Why IOC, HPCL And BPCL Are Gaining

Lower crude prices can work in favour of oil marketing companies such as IOC, HPCL and BPCL. These companies buy crude for their refining and fuel businesses. If their crude input costs fall while petrol and diesel selling prices do not decline by the same amount, their margins on fuel sales can improve.

This is also why oil marketing stocks can react positively when crude prices fall.

ONGC And Oil India See Opposite Move

Upstream producers face a different equation. ONGC and Oil India produce crude oil, so the price they receive for their output is linked to international oil prices. A fall in crude can reduce their oil realisations and put pressure on revenue.

For now, investors are tracking crude prices closely as the market assesses how quickly Middle East supplies can return to normal levels. Brent's move around the $103-a-barrel mark remains an important factor for both refiners and oil producers.

Also Read - Hospital Stocks Fall Up To 7% As Investors Book Profits After Healthcare Rally