IOC, BPCL, HPCL Surge Up To 5% As Crude Slips Post Iran-Israel Ceasefire; Oil India Dips 3%
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Oil and gas stocks saw renewed investor interest on Tuesday, June 24, after crude oil prices dropped sharply
Oil & Gas Stocks Rally: Oil and gas stocks saw renewed investor interest on Tuesday, June 24, after crude oil prices dropped sharply following US President Donald Trump's announcement of a potential ceasefire between Israel and Iran. The development raised hopes of an end to escalating tensions in the Middle East.
In the previous session, Brent crude futures tumbled $5.53 or 7.2% to $71.48 per barrel, while US West Texas Intermediate (WTI) fell an equal $5.53 or 7.2% to $68.51 per barrel.
Shares of downstream oil marketing companies (OMCs) like Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL)—which were under pressure last month due to high crude prices—rebounded strongly.
At 9:17 a.m., IOC stock rose 3.6% to Rs 144.93, BPCL jumped 3.3% to Rs 323.85, and HPCL surged 4.5% to Rs 411.50 on the NSE.
Conversely, upstream oil explorers, which had outperformed during the recent crude spike, saw profit booking. ONGC slipped 2% to Rs 246.13, while Oil India dropped 3.4% to Rs 456.1.
Typically, rising crude oil prices hurt OMCs due to higher input costs and limited pricing flexibility, compressing margins. However, the same price surge benefits exploration firms like ONGC and Oil India, whose profits increase per barrel extracted with largely fixed production costs.
Brokerage Emkay Global had earlier noted that unless Brent averages above $75/bbl, it sees no material downside to its earnings estimates for HPCL, BPCL, and IOCL. Positive factors include steady earnings, lower global LPG prices, and subsidy support.
JM Financial maintained its 'Buy' rating on ONGC and Oil India, highlighting their strong correlation with high crude prices. The firm estimates that every $1/bbl increase in crude boosts their EPS by 1.5–2%. At current market levels, the stocks are factoring in only $65/bbl crude realisations, suggesting potential upside.
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