OMC stocks: Rs 3 fuel hike puts BPCL, HPCL in focus

Why OMC shares are back in focus

Shares of Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corporation Ltd (IOCL) are expected to react to a petrol and diesel price hike of up to Rs 3 per litre. The increase comes at a time when global crude prices have been volatile and supply risk has risen due to the West Asia conflict and disruptions around the Strait of Hormuz. The move is being read as partial relief for oil marketing companies (OMCs), which have faced heavy under-recoveries when retail prices stay below cost. But analysts have also flagged that the hike is smaller than what would be required to fully neutralise losses at elevated crude prices. The backdrop includes a wider market selloff in OMC counters whenever crude spikes, and a rotation in investor interest toward upstream producers. In 2026 so far, HPCL, BPCL and IOCL shares have fallen as much as 24% amid the broader energy crisis, underscoring how sensitive the segment remains to crude and policy signals.

The immediate trigger: petrol and diesel up by Rs 3

OMCs raised petrol and diesel prices by up to Rs 3 per litre with immediate effect amid prolonged disruption in shipping through the Strait of Hormuz. In the national capital, petrol was priced at Rs 97.77 per litre after the hike, while diesel rose to Rs 90.67 per litre. In Mumbai, petrol increased by Rs 3.14 to Rs 106.68 per litre. Chennai saw a petrol increase of Rs 2.83, taking the price to Rs 103.67 per litre. The hike is also seen as lower than a Rs 5 per litre increase that some media reports had anticipated earlier. Analysts have estimated a far larger increase is required for OMCs to stop incurring losses, highlighting the gap between near-term relief and structural profitability.

Under-recoveries remain the core issue

Brokerages have repeatedly pointed to the size of under-recoveries when crude stays high and retail prices are not fully aligned. Emkay Global pegged under-recoveries at Rs 17-18 per litre at current crude levels, even after excise cuts of Rs 10 per litre effected on March 27. Emkay linked these under-recoveries to quarterly OMC losses of Rs 57,000-58,000 crore. It also said hikes of Rs 10 per litre would cover about 50% of under-recoveries, either in one shot or via creeping hikes over 2-3 weeks. Ahead of the recent increase, analysts had estimated a Rs 15-20 per litre rise would be needed for OMCs to stop incurring losses. That context frames the Rs 3 move as a partial step rather than a complete solution.

Government view: losses and uninterrupted supply

Sujata Sharma, Joint Secretary at the Ministry of Petroleum and Natural Gas (MoPNG), said OMCs were absorbing at least Rs 30,000 crore every month due to under-recoveries on petrol, diesel and LPG. She noted that OMCs are buying crude, LPG and natural gas at very high levels. Sharma also said the government has ensured uninterrupted supply to domestic households, and that there has been no rationing of petrol or diesel despite the international spike. These comments were made during an Inter-Ministerial briefing in New Delhi on the West Asia crisis, linking domestic fuel economics to geopolitical disruptions.

Strait of Hormuz risk and the crude price jump

The Strait of Hormuz is a narrow 33-kilometre waterway connecting the Persian Gulf with the Gulf of Oman and handles over 20% of the world’s daily oil and gas shipments. Separate market reporting also highlighted that the route handles nearly 20% of global oil flows and that more than 40% of India’s crude imports pass through it. There has been no confirmed full closure, but shipping disruptions and the possibility of supply disruption have been enough to move prices and sentiment. Oil prices crossed $100 per barrel earlier in the month after the outbreak of conflict in the oil-rich Middle East. In one market snapshot, Brent rose more than 1% to $107 per barrel, while WTI traded above $102 per barrel.

How markets priced the risk: OMCs down, upstream up

On a day marked by sharp swings in the broader market, energy stocks saw heavy movement as crude jumped. Reported declines included Indian Oil down up to 5.03%, HPCL down 5.31%, and BPCL down 6.09%, while Reliance Industries slipped over 3%. In the same window, upstream producers gained, with ONGC up 4.73% and OIL India up 4.43%, reflecting a shift from marketing exposure to crude-linked realisations. In another trading update on the BSE at 9:43 AM, BPCL was down 3.74%, HPCL was down 4.2% and IOCL slipped 3.01%, even as the BSE Sensex was up 1.78% at 76,170.63. The divergence shows how oil marketing profitability can come under renewed pressure when crude rises sharply, even if the broader index is positive.

Policy actions in the background: excise cuts and export duties

The government has also used taxation changes to cushion the system during periods of high crude. A gazette notification by the Department of Revenue said the special additional excise duty on petrol was cut to Rs 3 per litre from Rs 13 per litre, and the duty on diesel was reduced to nil from Rs 10 per litre. Data compiled by NDTV Profit showed total excise duty on petrol reduced to Rs 11.9 per litre from Rs 21.9 per litre, and on diesel to Rs 7.8 per litre from Rs 17.8 per litre. Analysts tracked by NDTV Profit estimated the duty cut could reduce government revenue by about Rs 1.7 lakh crore, nearly 5% of the central government’s gross revenue. Separately, commentary also pegged the hit to the exchequer at Rs 1.5 lakh crore. On the trade side, export duties were raised sharply, with diesel export duty increased to Rs 55.5 per litre from Rs 21.5 per litre and aviation turbine fuel (ATF) to Rs 42 per litre from Rs 29.5 per litre.

Inflation linkages: CPI weight and basis-point impact

Nomura had earlier flagged that petrol and diesel have a 4.8% weighting in India’s CPI basket. On that basis, it suggested a 5% increase could add around 25-30 basis points to headline inflation. This matters because fuel price decisions can create a direct inflation impulse and a second-order effect through freight and logistics costs. Brokerages also cautioned that larger increases could trigger an inflation and consumption shock, with a more pronounced impact on mass segments, as noted in Emkay’s assessment of the scale of hikes required to cover under-recoveries.

Key numbers at a glance

What this means for BPCL, HPCL and IOCL investors

The Rs 3 per litre hike is a tangible move toward reducing marketing losses, but brokerages have clearly outlined that significantly higher increases would be required to fully offset under-recoveries at elevated crude prices. The market’s response has also been shaped by geopolitical headlines, particularly risks around the Strait of Hormuz, given India’s high import dependence and the large share of imports routed through the corridor. At the same time, tax changes and export duty adjustments show the government’s use of fiscal levers to balance consumer prices, OMC viability, and revenue trade-offs. Another variable is inflation sensitivity, because fuel has a measurable CPI impact and can influence broader policy choices.

Conclusion

BPCL, HPCL and IOCL remain tightly linked to crude volatility, policy actions on taxes, and the pace of retail price adjustments. The latest increase of up to Rs 3 per litre offers some relief, but analyst estimates in the same news flow suggest under-recoveries remain substantial at current crude levels. With Brent trading above the $100-per-barrel zone in parts of the recent period and supply-risk headlines continuing, OMC stocks are likely to stay reactive to further price actions, duty changes, and updates on shipping conditions through the Strait of Hormuz.