Summary of this article
The Nifty Oil and Gas index fell 6 per cent over four sessions following the US capture of Venezuela's President.
Trump’s proposed 500 per cent tariff on countries buying Russian oil has sparked massive selling in Reliance and ONGC.
Investors are booking profits amid fears of excise duty hikes in the upcoming Budget as global crude prices soften.
Petroleum industry stocks have come into focus in the first few days of 2026. A major geopolitical shake-up in the form of the US' capture of Venezuelan President Nicolás Maduro has led to the heavy selling of stocks of oil and gas companies.
On January 8, shares of India’s major oil and gas sector companies are trading in the red. Notably, the Nifty Oil and Gas index has slipped significantly among all sectoral indices. The index has extended losses for the fourth straight session since January 2. The declines followed the capture of the Venezuelan President on the weekend of January 3. The Nifty Oil and Gas index has slipped nearly 6 per cent in its four-session losing spree.
Petroleum Stocks Reel Under Pressure
On January 8, petroleum stocks are reeling under pressure and dragging the index lower. The Nifty Oil and Gas index slipped nearly 3 per cent to an intraday low of around 11,566.65 levels. All 15 constituents of the index finished in the red. Index heavyweights such as Reliance and ONGC dragged the index as they fell 2.35 per cent and 3.37 per cent to their respective lows. Shares of Reliance Industries and ONGC are the top constituents by weightage, with weightages of 32.48 per cent and 14.36 per cent, respectively.
Among the constituents of the index, shares of Indian Oil Corporation and Hindustan Petroleum faced significant pressure and declined the most, finishing lower by 5.34 per cent and 4.09 per cent, respectively. Other major losers included Bharat Petroleum Corporation and GAIL, which closed lower by 3.72 per cent and 3.01 per cent, respectively.
Thus, downstream companies such as Indian Oil, Bharat Petroleum, Hindustan Petroleum, integrated private sector players like Reliance Industries, and upstream producers such as ONGC and Oil India have come under significant pressure. Shares of companies which produce specialised petroleum products, like Castrol India, which focus on lubricants, also came under pressure and finished lower by 0.75 per cent at the time of writing.
Why Are Petroleum Stocks Declining
Petroleum stocks have extended losses due to a combination of company-specific and industry-specific triggers following a massive geopolitical shift and fiscal fears. Here are some reasons which are driving the sell-offs in petroleum stocks:
500 Per Cent Tariff Threat
On January 8, Trump greenlit a bipartisan bill called the Sanctioning Russia Act of 2025. The bill seeks to impose secondary tariffs of up to 500 per cent on exports from countries that continue to purchase Russian oil. Additionally, US Senator Lindsey Graham explicitly named India, China, and Brazil as targets. The announcement of the 500 per cent tariffs has led to losses for both state-owned and privately owned petroleum companies as they are likely to be caught between the government’s need for cheap energy and the threat to their businesses.
Supply Disruption Fears
The U.S. military's capture of Maduro is likely to cause a disruption in the supply of Venezuelan crude oil to India. This supply-side risk is significant for domestic petroleum companies. On January 7, Trump announced in a post on the social media platform Truth Social that the interim authorities in Venezuela will transfer 30 to 50 million barrels of oil to the United States.
“I am pleased to announce that the Interim Authorities in Venezuela will be turning over between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil, to the United States of America,” Trump said.
Venezuelan crude accounted for just 0.6 per cent of India’s total crude oil imports in 2025, according to energy analytics firm Kpler. In the past, India had a greater reliance on Venezuelan crude due to its discounted price compared to Brent Crude, due to the greater technical requirements needed for processing it. However, companies such as ONGC, which have the capabilities to process Venezuelan crude, are unlikely to be able to rebuild their capacities in the region following the announcement, as the oil will be diverted to U.S. refineries or sold at global market rates.
“This Oil will be sold at its Market Price, and that money will be controlled by me, as President of the United States of America, to ensure it is used to benefit the people of Venezuela and the United States!” Trump said on Truth Social.
Stranded Assets In Venezuela
Amid the escalation of the conflict, shares of several petroleum sector companies which had resources in Venezuela are trading lower as the chances of a recovery seem less likely now. Notably, ONGC Videsh has a 40 per cent stake in the San Cristobal onshore oilfield in Venezuela. Earlier in 2020, US sanctions blocked OVL’s access to the oilfields. According to a report by Financial Express, which cited official sources, Venezuela owes OVL $536 million in dividends on its stake. While a new government in Venezuela might eventually pay OVL, the immediate chaos has reduced speculation around a near-term payment.
Earlier in April 2008, OVL, Indian Oil Corporation, Oil India, Repsol of Spain and Petronas of Malaysia were awarded a contract to develop an oil project in Carabobo in the Orinoco belt of Venezuela. While ONGC holds 11 per cent stake in the project, Oil India and IOCL each hold a 3.5 per cent equity stake. Like OVL, these assets are also currently "stranded" till any official announcement is made from Venezuela’s end. While the timeline for the unlocking of these assets has now become uncertain, a report by CNBC TV 18, which cited Ranjit Rath, Chairman and Managing Director of Oil India, said that Oil India’s management is monitoring developments in Venezuela and is open to increasing investments if production improves.
Pre-Budget Fears
Global crude prices have reduced to around $60 per barrel as of January 8. Historically, the government uses the profits generated due to falling crude oil prices and does not pass them on to OMCs by hiking excise on petrol and diesel. Earlier on April 7, 2025, the government hiked excise duty on petrol and diesel by Rs 2 per litre each amid falling prices. With the Union Budget fast approaching, the government might likely hike excise duties again to reap the benefits of lower global oil prices.
Likely Profit Booking In Select Stocks
Several OMC stocks witnessed record highs in the first week of 2025 amid optimism around the US takeover. However, likely, investors are now "locking in" profits.
