Indian oil marketing company (OMC) stocks remained under pressure on Monday as crude oil prices stayed above the key psychological mark of $100 per barrel and hopes of a diplomatic breakthrough in the Iran-Israel-US war remained elusive.
With the Strait of Hormuz effectively shut to traffic, investors are increasingly pricing in the risk of prolonged disruption to global oil flows, a development that could keep input costs elevated and weigh on the earnings outlook for oil marketing companies.
IOC dropped 5.3% to its day’s low of ₹148.15, HPCL declined 5% to ₹350.50, and BPCL slipped 4.7% to ₹304.15. The weakness has been building for some time. Over the past month, these stocks have declined by as much as 18%, as crude prices surged to multi-month highs after the outbreak of the war earlier this month.
Why high crude is hurting OMCs
The latest selloff reflects investor concern that elevated crude prices could erode marketing profitability, especially if retail fuel prices remain unchanged. Brent crude traded near $105 per barrel on Monday. It was up 1.6% at $104.73 after briefly opening above $106 per barrel, and has climbed more than 40% since the war began. US benchmark crude gained 1% to $99.68 per barrel and is up nearly 50% over the same period.
The war has sharply disrupted cargo traffic through the Strait of Hormuz, the narrow 33-kilometre waterway that links the Persian Gulf and the Gulf of Oman and carries over 20% of the world’s oil and gas shipments. Iran has effectively stopped cargo movement through the route by attacking ships trying to pass through, forcing oil producers to cut production as exports get stranded.
HDFC Securities said the near-term margin picture for OMCs has weakened as crude prices have jumped while transportation fuel prices at the retail level have remained unchanged.
HDFC Securities said, “With the retail selling prices of transportation fuels (gasoline and diesel) remaining unchanged and sudden spike in the brent crude oil price, the integrated margin of OMCs is set to decline in the near term compared to the 9MFY26 reported margin ranging from INR 8/ltr to INR 12/ltr.”
The brokerage, however, noted that higher crude prices could also lead to inventory gains, which may provide some support to reported margins in Q4FY26. It said gasoline and diesel cracks have risen sharply since the war began, helping gross refining margins expand significantly. The Singapore Refining Margin, which averaged $10.2 per barrel in February 2026, rose 91% to an average of $19.4 per barrel.
Even so, the benefit from stronger refining margins may not fully offset the pressure on marketing margins. HDFC Securities said every $1 per barrel increase in gross refining margin raises annual EPS by 11% for IOC, 9% for BPCL and 7% for HPCL. At the same time, every Re 1 per liter fall in marketing margin reduces FY27 EPS by 21% for IOC, 20% for BPCL and 24% for HPCL.
IOC, BPCL, HOCL: Which OMC should you buy?
According to HDFC Securities, IOC fares better over HPCL, BPCL.
“With integrated margin under pressure and share of refining margin in overall integrated margin increasing, companies with higher earnings sensitivity to marketing margins will be the most negatively impacted. Given that IOCL has a lower marketing mix in the overall volume, it should fare better compared to peers like BPCL and HPCL in the near term,” said the brokerage.
Elara also flagged a sharp earnings risk for the sector if crude remains elevated and there is no relief through a fuel price hike, tax cut or higher LPG subsidy. It said OMCs are among the hardest hit in a high-crude environment, with higher refining margins able to only partially offset the collapse in retail margins and rising LPG losses.
Elara said, “At current Brent of USD 100/bbl, earnings could drop sharply ~90-190% absent retail price hike, tax cut, or higher LPG subsidy. Among OMCs, HPCL & BPCL are most exposed due to their higher retail volume relative to refining capacity. IOCL is better placed among OMCs.”
For now, HDFC Securities has maintained its buy recommendation on all OMCs. But the near-term outlook remains tied to the direction of crude prices and the duration of the Strait of Hormuz disruption. If oil stays above $100 and retail fuel prices remain unchanged, pressure on marketing-led earnings could continue, with IOC seen as relatively better placed than BPCL and HPCL.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
