Oil stocks slide: OMCs lose Rs 1.8 lakh cr in 2026

Market sell-off hits refiners and OMCs

Indian refinery and oil marketing company (OMC) stocks have seen a sharp repricing since the US-Iran conflict escalated on February 27. National Stock Exchange (NSE) data cited in the report shows the group has lost nearly Rs 180,000 crore in market capitalisation over the period. The fall has been linked to a mix of higher crude oil prices and a weakening rupee, which together lift input costs for companies that depend heavily on imported crude. The pressure has been most visible in state-run fuel retailers, where losses on selling regulated fuels below cost have also returned to focus. Investors have responded with a broad sell-off in crude-sensitive names.

Market-cap losses: IOCL leads in absolute terms

Indian Oil Corporation (IOCL) recorded the largest drop in market capitalisation in absolute terms, with a decline of over Rs 67,753 crore. Reliance Industries (RIL) followed with a fall of Rs 61,755 crore, while Bharat Petroleum Corporation Ltd (BPCL) lost Rs 38,916 crore and Hindustan Petroleum Corporation Ltd (HPCL) lost Rs 10,894 crore. These moves together explain a large part of the sector-level erosion highlighted in the report. The data underscores how quickly market valuations can compress when crude prices move sharply against refiners and fuel retailers. It also shows that the impact was not limited to state-owned OMCs, with Reliance also seeing a sizable reduction in market value.

Price damage: steep declines across key stocks

Share prices fell sharply over the same period. IOCL declined over 26%, BPCL nearly 24%, and HPCL around 13%, while Reliance fell about 2.4%. The contrast reflects different business mixes, but the direction was broadly the same as crude stayed elevated. In a separate trading update cited, crude-sensitive stocks also saw smaller intraday declines when Brent rose about 4% overnight to near USD 100 a barrel. HPCL fell 0.72% to Rs 381.65, BPCL declined 1.05% to Rs 314.70, and IOCL was down 0.28% at Rs 146.90 on the NSE.

Crude surge after February 27 drove cost pressure

The sell-off was linked to a sharp rise in global crude oil prices following the escalation of the US-Iran conflict. Brent crude moved from nearly USD 72.48 per barrel on February 27 to above USD 106 by May 20, according to the figures cited. For Indian refiners and OMCs, that increase raises the cost of crude and imported products, especially when the local currency is weak. The report specifically notes that expensive crude and a weaker rupee have substantially raised input costs, intensifying pressure on profitability and market valuations.

Under-recoveries return: minister flags daily losses

Oil Minister Hardeep Singh Puri said state-run fuel retailers are losing around Rs 1,000 crore every day as they continue to sell petrol, diesel and LPG below cost. He added cumulative under-recoveries have climbed to nearly Rs 198,000 crore. For the current quarter, he put the combined under-recovery on petrol, diesel and LPG at about Rs 198,000 crore, while “actual losses” were estimated at close to Rs 100,000 crore. Puri warned that if current crude price trends persist while retail rates remain unchanged, OMCs could face losses of around Rs 100,000 crore in a single quarter. He said such a quarter of losses would be enough to wipe out the sector’s annual profits, citing pressure on IOC, BPCL and HPCL.

PTI sources: losses beyond Rs 100,000 crore in 10 weeks

Sources cited by PTI said state-owned OMCs have incurred losses of more than Rs 100,000 crore over the past 10 weeks while shielding consumers from rising global fuel prices. Those sources put combined under-recoveries at around Rs 1,600 crore to Rs 1,700 crore per day, higher than the minister’s Rs 1,000 crore per day comment. The losses were attributed to the gap between the benchmark international cost and the retail selling price. Despite this, the report said supplies of petrol, diesel and LPG have continued without interruption.

Retail prices largely unchanged despite cost spike

The reports note that retail fuel prices have remained unchanged for four years despite elevated crude prices. PTI sources said petrol and diesel prices were unchanged at Rs 94.77 per litre and Rs 87.67 per litre, respectively. Domestic LPG prices were increased by Rs 60 per cylinder in March, but were still below actual cost levels. The ongoing mismatch between input costs and retail prices is central to the under-recovery build-up reported by both the minister and sources.

Supply comfort: inventories and domestic LPG output

Puri said India had “no supply-side problems” and that the country started the crisis with more than enough crude oil and LPG inventories. He said India currently holds around 60 days of crude oil supplies, 60 days of LNG inventories and 45 days of LPG reserves, adding there was “absolutely no cause for anxiety”. He also said domestic LPG production was ramped up to 54,000 tonnes per day from about 36,000 tonnes previously. The statement was aimed at separating supply risk from profitability stress, with the latter driven by prices and under-recoveries.

Market moves and broker actions as crude spiked

The broader market response has included sharp single-day declines when crude prices jumped. One report said Indian Oil dipped 4.6%, Hindustan Petroleum slid 4.9% and Bharat Petroleum dropped 5.4%, pulling the Nifty oil and gas index down 2.7% and the energy index 2.1% lower, while the Nifty 50 slid 2.8%. Another report described a separate session where major state-run refiners fell more sharply, with IOCL down 6.6%, HPCL down 7.5% and BPCL down 7.1% as Brent jumped close to USD 120 per barrel. In yet another update dated Monday, March 9, BPCL sank 7% to Rs 328.15, IOCL tumbled 2% to Rs 168.1, and HPCL fell 6.7% to Rs 378.1. That report also said UBS downgraded BPCL and IOCL to ‘neutral’ with targets of Rs 365 and Rs 175, and cut HPCL to ‘sell’ with a target of Rs 340.

Key figures at a glance

Why this matters for investors and policy

The episode highlights two linked risks for Indian energy stocks: earnings sensitivity to crude and the policy overhang created by retail price stability during global shocks. When crude rises quickly, refiners and OMCs face a direct cost hit, amplified if the rupee weakens. For state-run retailers, the reported under-recoveries add another layer, because selling petrol, diesel and LPG below cost can rapidly translate into large quarterly losses. At the same time, the minister’s inventory comments suggest the stress is financial rather than a near-term supply issue.

Conclusion

Indian refinery and OMC valuations have come under pressure since February 27 as Brent surged and currency weakness raised input costs, while under-recoveries widened as retail prices stayed largely unchanged. The government has stressed that fuel availability is comfortable, with inventories covering weeks of demand and higher domestic LPG output. The next set of signals for markets will likely come from how under-recoveries evolve through the current quarter and any policy decisions related to retail fuel pricing.