Oil Stocks Fall As Crude Crosses $110 Per Barrel

Shares of oil marketing companies (OMCs) remained under pressure on April 6 as rising crude oil prices weighed on sentiment. Indian Oil Corporation fell 1.92% to ₹131.56, Hindustan Petroleum Corporation declined 1.43% to ₹321.35, and Bharat Petroleum Corporation slipped 1.53% to ₹273.90 during the session.

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OMC’s stock prices fall after a rise in global crude oil prices, which have crossed $110 per barrel, according to Reuters.

Effect of Higher Crude Prices on Input Costs

Higher crude oil prices raise input costs in OMCs, impacting their operations. With increasing tensions, the global energy market prices have witnessed high volatility with increased prices of crude and refined products.

The situation in terms of supply is also affected by the unrest in West Asia, especially the strait of Hormuz, which acts as a transit point for oil globally, as per Reuters reports.

Saudi Aramco Raises Prices For Asia

Saudi Aramco has increased the official selling price of its Arab Light crude for Asia to a premium of $19.50 per barrel above regional benchmarks for May shipments, according to Bloomberg. The revised version is consistent with tighter supply conditions and constrained flows via the Strait of Hormuz.

Geopolitical Events Impact Supply

As per Reuters, the United States, Iran, and the involved parties are considering a proposal for a 45-day ceasefire agreement. However, no immediate agreement has been reached.

U.S. President Donald Trump warned of potential military action if Iran does not reopen the Strait of Hormuz. Iran has not agreed to reopen the route, and vessel movement remains limited, according to Reuters.

Iraq Supply Remains Unaffected

Iran has indicated that Iraq would be exempt from certain restrictions, which may allow partial continuity in oil exports. Separately, Iraq’s State Organization for Marketing of Oil (SOMO) stated that its shipments remain unaffected, enabling ongoing crude supply, according to Bloomberg.

The movement in oil marketing company stocks reflects the impact of rising crude prices and global supply disruptions on the sector during the trading session.