Shares of Indian refiners slumped on Monday, as the widening US-Israeli war with Iran propelled Brent crude prices toward $120 per barrel – a near four-year high- threatening their near-term earnings.
State-run Indian Oil dipped 6.6 per cent, Hindustan Petroleum slid 7.5 per cent and Bharat Petroleum dropped 7.1 per cent, and were headed for their steepest falls in more than a year.
Reliance Industries lost 2 per cent.
Brent crude soared as much as 26.4 per cent to $117.16 a barrel and was last up 23 per cent at $114.08 by 9:15 a.m. IST.
UBS said oil marketing companies are “negatively leveraged” to the crude spike as they sell more diesel and gasoline than they produce, estimating sales-to-production ratios at 1:2 for IOC and BPCL and 2:2 for HPCL.
The brokerage cut IOC and BPCL to “neutral” and BPCL to “sell” from “buy”.
The rout dragged the Nifty oil and gas index down 2.7 per cent and the energy index 2.1 per cent lower, while the benchmark Nifty 50 slid 2.8 per cent. The oil and gas index has fallen 6.6 per cent since the US-Israeli strike on Iran on February 27.
Citi warned that refiners’ earnings will hinge on how long the geopolitical shock lasts, flagging risks from a potential closure of the Strait of Hormuz and any shutdown of Qatar’s LNG output – each supplying about half of India’s crude and LNG imports.
Any disruption beyond the one month currently priced in could sharply tighten LNG markets, with low European storage for October 2026 raising the risk of “non-linear” price spikes, the brokerage added.
