Business

IIE DIGITAL DESK ;  May 25: Shares of India’s major state-owned oil refining and marketing companies witnessed a strong rally on Monday, with heavy buying seen across the oil and gas sector. Stocks of Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL), and Bharat Petroleum Corporation Limited (BPCL) surged significantly during the trading session, along with gains in several related energy stocks.

Monday’s trading session, IOCL shares rose by nearly 4 percent, touching around ₹145. HPCL shares jumped by about 6 percent to ₹412.55, while BPCL gained nearly 4.5 percent, reaching ₹309. Shares of GAIL India Limited also rose by around 5 percent, and Petronet LNG Limited climbed more than 3.5 percent during the session.

Market experts have identified two major reasons behind this strong upward movement in oil marketing companies. Firstly, fuel prices in the domestic market saw a fresh hike, with petrol increasing by ₹2.61 per litre and diesel rising by ₹2.71 per litre. This marks the fourth increase in less than two weeks, improving expectations of better refining margins for oil marketing companies.

Secondly, international crude oil prices witnessed a sharp decline amid easing geopolitical tensions and renewed optimism over a possible peace agreement between United States and Iran. Reports suggesting improved stability in West Asia and the possibility of reopening key supply routes such as the Strait of Hormuz have eased global oil supply concerns, leading to a fall in crude prices.

Brent crude prices dropped by nearly 5 percent to around $98 per barrel, while WTI crude futures declined by nearly 6 percent to around $91.30 per barrel. Analysts noted that crude oil prices had previously surged sharply after tensions escalated in West Asia, nearly doubling compared to earlier levels this year, which significantly increased production costs for oil companies.

The domestic market, petrol and diesel prices were not fully adjusted in line with earlier global crude price spikes, leading to heavy losses for oil marketing companies such as IOCL, BPCL, and HPCL over the past few months. Market experts believe that the recent fuel price hike may help reduce these losses, while simultaneously falling crude oil prices will lower input costs.

The combined effect of higher domestic fuel prices and easing crude oil costs is being seen as the primary driver behind the strong rally in oil marketing company stocks, with analysts suggesting that improved margins may support further gains if global trends remain stable.