Hindustan Petroleum, Bharat Petroleum, Indian Oil rise up to 3% on second fuel price hike in a week

Mumbai, May 19: Shares of state-run oil marketing companies (OMCs) rose up to 3% on Tuesday after the government raised petrol and diesel prices for the second time in less than a week, boosting investor hopes of improved marketing margins amid elevated crude oil prices.

Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) were all in focus after petrol and diesel prices were increased by around ₹0.90 per litre. The latest revision follows a ₹3 per litre hike announced last week as state-run fuel retailers move to offset losses caused by the recent spike in global crude oil prices.

The fuel price hike comes at a time when Brent crude continues to hover near $110 per barrel despite easing slightly on hopes of a diplomatic breakthrough between the United States and Iran. Rising geopolitical tensions in the Middle East and concerns over supply disruptions had pushed crude prices sharply higher in recent sessions.

HPCL cheered the latest fuel price hike as greater pricing flexibility allows the fuel retailer to cushion the impact of expensive crude imports. Source: NSE

HPCL rose 3% at Rs 369.65, BPCL increased 2.7% at Rs 288.35, while IOC rose 2.5% at Rs 135.10.

Investor sentiment towards OMCs improved after the latest revision signalled that the government may allow fuel retailers greater pricing flexibility to cushion the impact of expensive crude imports. Back-to-back price hikes could help narrow marketing losses for companies such as HPCL, BPCL and IOC, especially if crude prices remain elevated over the coming weeks.

BPCL rose as markets tookheart from the government’s willingness to pass on at least part of the increase in crude costs to consumers rather than forcing oil retailers to absorb the full impact. Source: NSE

The rise in OMC shares also reflected expectations that further price increases may follow if global oil prices stay high. Sustained fuel price revisions could improve earnings visibility for the sector after a prolonged period of pressure on retail fuel margins.

However, risks remain. India continues to rely heavily on crude oil imports, leaving fuel retailers vulnerable to fluctuations in global oil prices and currency movements. The rupee’s recent slide to record lows against the US dollar has further increased the cost of crude imports for domestic refiners and marketers.

IOC recorded a rise as back-to-back price hikes could help the fuel retailer narrow marketing losses. Source: NSE

Apart from crude prices, investors are also closely watching geopolitical developments in the Middle East, particularly around Iran and the Strait of Hormuz, a key global oil transit route. Any escalation in regional tensions could once again trigger a sharp spike in crude prices and weigh on profitability across the sector.

Despite these concerns, Tuesday’s gains in OMC stocks suggest markets are taking comfort from the government’s willingness to pass on at least part of the increase in crude costs to consumers rather than forcing oil retailers to absorb the full impact.

Going ahead, the trajectory of global crude prices, movement in the rupee and further fuel pricing decisions by the government will remain key triggers for OMC stocks.

Source:
https://www.nseindia.com/get-quote/equity/BPCL/Bharat-Petroleum-Corporation-Limited,https://www.nseindia.com/get-quote/equity/HINDPETRO/Hindustan-Petroleum-Corporation-Limited, https://www.nseindia.com/get-quote/equity/IOC/Indian-Oil-Corporation-Limited