March 9 (Reuters): Shares of Indian refiners slumped on Monday, as the widening U.S.-Israeli war with Iran propelled Brent crude prices toward $120 per barrel – a near four-year high – threatening their near-term earnings.
State-run Indian Oil (IOC.NS), dipped 6.6%, Hindustan Petroleum (HPCL.NS), slid 7.5% and Bharat Petroleum (BPCL.NS), dropped 7.1%, and were headed for their steepest falls in more than a year.Reliance Industries (RELI.NS), lost 2%.
Brent crude soared as much as 26.4% to $117.16 a barrel and was last up 23% at $114.08 by 9:15 a.m. IST.
UBS said oil marketing companies are “negatively leveraged” to the crude spike as they sell more diesel and gasoline than they produce, estimating sales-to-production ratios at 1:2 for IOC and BPCL and 2:2 for HPCL.
The brokerage cut IOC and BPCL to “neutral” and BPCL to “sell” from “buy”.
The rout dragged the Nifty oil and gas index (.NIFOILGAS), down 2.7% and the energy index (.NIFTYENR), 2.1% lower, while the benchmark Nifty 50 (.NSEI), slid 2.8%. The oil and gas index has fallen 6.6% since the U.S.-Israeli strike on Iran on February 27.
Citi warned that refiners’ earnings will hinge on how long the geopolitical shock lasts, flagging risks from a potential closure of the Strait of Hormuz and any shutdown of Qatar’s LNG output – each supplying about half of India’s crude and LNG imports.
Any disruption beyond the one month currently priced in could sharply tighten LNG markets, with low European storage for October 2026 raising the risk of “non-linear” price spikes, the brokerage added.
This report has been sourced from Reuters. The Sen Times is not responsible for its content.