Shares of domestic oil marketing companies (OMCs) slid up to 7.5% in intra-day trade on Monday, i.e. 6 January, as global crude oil prices spiked on escalating tensions in the Middle East after US President Donald Trump threatened to impose sanctions on Iraq if US troops were forced to withdraw from the country.
Shares of Hindustan Petroleum Corp. Ltd (HPCL) plunged nearly 7.5%, while those of Bharat Petroleum Corp. Ltd (BPCL) and Indian Oil Corp. Ltd (IOC) were down nearly 4% and 2%, respectively. The BSE Oil and Gas Index was among the top sectoral losers in Monday’s trading session, down 2.4%.
Brent crude futures rose as much as 2.5%, up $1.69, to $70.29 per barrel on Monday after gaining 3% in the previous session. The US West Texas Intermediate crude stood at $64.39 a barrel, up $1.34, or 2.1%. Crude oil prices have been on a boil after a US air strike in Iraq killed Iranian commander Qassem Soleimani on Friday, heightening concerns that a widening Middle East conflict could disrupt oil supplies.
Experts believe crude prices are likely to remain at elevated levels in the next few weeks, hitting oil-importing countries like India. Stocks of OMCs, aviation companies, paints and chemicals companies may get severely hit if crude prices continue to rise.
“After easing of tension between the US and China, and output cuts undertaken by OPEC and its allies, crude oil prices were already rallying. Now coupled with the US airstrike, price of Brent has the potential to increase and cross the $70/barrel mark in the coming few days, depending on the retaliation planned by the Iran government and the longevity of the feud is continued by both the countries,” CARE Ratings said in a note to investors.
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