Shares of Indian oil marketing companies declined sharply in early trade on March 9 after global crude oil prices surged past $115 per barrel amid escalating geopolitical tensions in West Asia. The sharp rise in oil prices, combined with reports that retail petrol and diesel prices may remain unchanged, triggered selling pressure across the sector.

In morning trade, Bharat Petroleum Corporation fell around 7 percent to about ₹328, Hindustan Petroleum Corporation declined roughly 6.7 percent to ₹378, while Indian Oil Corporation slipped nearly 2 percent to ₹168. The selloff reflects investor concerns over potential margin compression if rising crude prices are not passed on to consumers through higher retail fuel prices.

Global brokerage UBS downgraded Indian Oil Corporation and Bharat Petroleum Corporation to neutral and cut Hindustan Petroleum Corporation to sell. The brokerage also reduced its FY27 profit estimates by about 19 percent for Indian Oil, 15 percent for BPCL, and 46 percent for HPCL, citing weaker marketing margins if crude prices remain elevated.

Analysts highlighted that even modest increases in crude prices can significantly impact profitability if retail prices remain unchanged. According to brokerage estimates, a $5 per barrel rise in crude prices without a corresponding increase in pump prices could reduce the sector’s profits by roughly half due to erosion in marketing margins.

Despite near term pressure, analysts noted that OMCs currently have crude and product inventories covering roughly 50 to 60 days, which provides temporary operational stability. However, a prolonged disruption in global oil supplies, particularly around the Strait of Hormuz, could eventually impact refining operations and fuel availability.