HPCL, BPCL, IOCL Shares Gain Up To 7 Per percent; Nifty Oil & Gas Surges Nearly 2 Per percent—Know Why

BPCL, HPCL, IOCL Share Price: Shares of Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corporation Ltd(IOCL) gained between 4.5 per cent and 7.21 per cent on the NSE. Stocks of domestic oil marketing companies gained after a drop in oil prices.

BPCL, HPCL IOCL Push Nifty Oil & Gas Higher

The Nifty Oil & Gas index surged nearly 2 per cent to an intraday high of 11,442.75. The index gained as three of its top constituents by weightage HPCL, BPCL and IOCL rallied on the NSE. Notably BPCL holds 9.53 per cent weightage in the index, IOCL holds 8.17 per cent weightage and HPCL holds 5.77 per cent weightage in the index.

Shares of Hindustan Petroleum Corporation Ltd gained the most as they surged 7.21 per cent to Rs 412.85 apiece on the NSE. On the other hand, the shares of Indian Oil Corporation Ltd gained 4.5 per cent to trade at an intraday high of Rs 149.74 apiece, and shares of Bharat Petroleum Corporation Ltd climbed 4.72 per cent to an intraday high of Rs 325.85 apiece.

Why Are OMC Stocks Gaining

Shares of HPCL, BPCL and IOCL gained after crude oil prices fell by more than $2 per barrel. A decline in crude oil prices is generally seen as a tail-wind for OMCs as it helps them in acquiring raw material at a lower cost and can potentially increase their margins.

Notably, the drop in crude oil prices was seen after the Organization of the Petroleum Exporting Countries (OPEC+) announced its plans to ramp up oil production according to a Reuters report. Oil prices declined by over $2 per barrel on May 5 following the announcement.

As per the report, Brent crude futures fell $2.21 or 3.61 per cent to $59.08 a barrel while U.S. West Texas Intermediate crude traded around $56 per barrel, down by $2.29 or 3.93 per cent. The prices dropped as a ramp-up in oil production has raised concern regarding more supply coming into a market clouded by an uncertain demand outlook.

Both Brent crude futures and U.S. West Texas Intermediate traded at their lowest level in nearly one month. Earlier on April 9, OPEC+ agreed to ramp up oil production hikes for the second straight month, raising the total output in June by 4,11,000 barrels per day (bpd).

This increase is expected to take the total combined hikes for April, May and June to 9,60,000 bpd, indicating 44 per cent unwinding of the 2.2 million bpd of cuts agreed on since 2022, according to the report.

Additionally, OPEC+ is also likely to unwind its voluntary cuts by October 2025 if members do not improve compliance with the production quotas. The report cited sources who claimed that Saudi Arabia is urging OPEC+ to accelerate the unwinding of earlier output cuts to penalise members such as Iraq and Kazakhstan for poor compliance.

This oil output hike comes amid the backdrop of escalating geopolitical tensions in the Middle East following Israeli Prime Minister Benjamin Netanyahu’s declaration to retaliate against Iran for the missile attack on Israel’s main airport. On the other hand, Iranian Defence Minister Aziz Nasirzadeh also said that the country would ‘strike back’ if it was attacked by the U.S. or Israel attacked.

At the time of writing, BPCL shares traded at Rs 325 apiece up by 4.45 per cent, IOCL shares traded at Rs 147.52 apiece up by 2.96 per cent and HPCL shares traded at Rs 410.2 apiece up by 6.53 per cent on the NSE.