HPCL, BPCL, IOC shares jump up to 4% over oil price decline as US-Iran tensions ease

OMC stocks rise

• OMC shares rose as oil prices fell amid eased supply risk concerns.
• HPCL, BPCL, and IOC shares gained up to 4 percent in trade.
• Analysts expect strong Q3 results for OMCs due to healthy refining margins.

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The shares of oil marketing companies (OMC) jumped in trade on January 16 as oil prices extended decline. This came as concerns around supply risks eased amid lower expectations of a US strike on Iran.

Hindustan Petroleum Corporation Limited (HPCL) shares surged nearly 4 percent to trade at Rs 456.50 apiece, snapping a two-session losing streak. Bharat Petroleum Corporation Limited (BPCL) shares meanwhile rose over 3 percent to Rs 367.75 apiece, and Indian Oil Corporation (IOC) shares gained around 2 percent to Rs 162.15 apiece.

Why are oil prices falling?

Oil prices have extended losses after US President Donald Trump signaled that he may hold off on attacking Iran for now. He said that he has been assured that Iran would stop killing protesters, reducing the likelihood of an immediate US military response to the demonstrations against the government of Supreme Leader Ayatollah Ali Khamenei and of disruptions to Iranian production and key shipping lanes.

"Despite the steady drumbeat of geopolitical risks and macro speculation, the underlying balance still points to ample supply ... unless we see a genuine revival in Chinese demand or a meaningful bottleneck in physical barrel flows, oil looks range-bound, with Brent broadly hovering between $57 and $67,” Reuters quoted Phillip Nova senior market analyst Priyanka Sachdeva as saying.

Brent crude fell more than 4 cents to $63.72. Analysts however have advised caution, highlighting the volatility still remains high. "While (Iranian supply) risks have eased somewhat, they remain significant, keeping the market nervous in the short term," IG analysts said in a client note, cited by Reuters.

How will OMCs perform in Q3?

The state-run OMCs are likely to register strong Q3 results on the back of healthy refining margins, according to analysts. In the Oct-December quarter of FY26, average oil prices declined by 6 percent on a sequential basis and 10 percent from the same period last year, while retail prices were unchanged.

“Due to elevated product cracks, refining margins will be sharply higher and implied marketing earnings weaker,” Kotak Institutional Equities said in its report.

Motilal Oswal expects the standalone EBITDA for Hindustan Petroleum, Bharat Petroleum, and Indian Oil to increase 9-18 percent on a sequential basis, due to strong refining margins and receipt of LPG compensation.

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