l Stock market today: Amid soaring crude oil prices due to supply disruption concerns, Indian OMC stocks have been under selling pressure since morning dealings. BPCL share price today opened lower at ₹286 per share on the NSE and touched an intraday low of ₹281.80 per share, logging a decline of around 2%. IOCL share price today corrected over 2.50%, whereas HPCL share price corrected over 2% within a few minutes of the Opening Bell on Friday.
According to stock market experts, OMC stocks are primarily under pressure due to the recent attacks on Saudi Arabia, which have exacerbated the crude oil supply disruption. This has driven Brent crude oil to $114 per barrel, while WTI has crossed the $100 per barrel mark. As this oil price rise will add pressure on these companies' balance sheets, the market is discounting this during Friday's dealings. However, they maintained that weakness in the Indian Rupee and fuel prices not rising in sync with global oil prices will weigh on OMC stocks. They advised OMC shareholders to avoid panic selling, as it is a short-term sentimental selling. OMC stocks may recover quickly once there is an easing of tensions in the Middle East.
It should be noted that every $1/bbl rise in oil price above ~$70/bbl hits OMCs’ auto-fuel GMM by ₹0.55/ltr and consolidated EBITDA by 7–9%, JM Financial had estimated in a report earlier, after the outbreak of the US-Iran war.
Speaking on the reason for fall in the OMC stocks on Friday, Avinash Gorakshkar, Founder of Avinash Mentor Research, said, “Fall in the OMC stocks on Friday can be attributed to three major reasons: soaring crude oil prices due to the fresh tension in the Middle East, petroleum product prices not rising in sync with the international crude oil prices, and weakness in the Indian Rupee.”
Gorakshkar said that all three factors will impact the balance sheets of OMCs, and it is the companies that will initially bear the costs of these developments.