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Shares of India's state-run refiners led by Indian Oil Corp. Ltd. saw their steepest declines in more than a year as a widening Iran war spiked crude oil prices to nearly $120/barrel.
Hindustan Petroleum Corp. Ltd. (HPCL) led the plunge, sliding 7.5%, followed by by Bharat Petroleum Corp. Ltd. (BPCL) with a 7.1% drop. Indian Oil fell up to 6.6%, while Reliance Industries Ltd. shed 2%.
The selloff dragged the Nifty Oil & Gas Index down 2.7%—bringing its cumulative losses to 6.6% since the initial US-Israeli strike on Iran on 27 February 2026. The broader energy index fell 2.1%, acting as a heavy drag on the benchmark Nifty 50, which slid 2.8%.
All of this, after Brent crude skyrocketed as much as 26.4% to $117.16 a barrel in early trading, before stabilising with a 23% gain at $114.08.
‘Negative Leverage’
Global brokerages were quick to re-evaluate the sector's profitability in the face of soaring input costs. UBS noted that Indian OMCs are “negatively leveraged” to abrupt crude spikes because their retail sales of diesel and petrol significantly outpace their own production capabilities. UBS estimates a sales-to-production ratio of 1:2 for Indian Oil and BPCL, and 2:2 for HPCL.
In response to the compressed margins, UBS issued sharp rating downgrades across the sector, moving Indian Oil to “neutral” and cutting BPCL to “sell” from previous “buy” ratings.
Supply Chain Threats
Citigroup Inc. warned that the ultimate hit to refiners' bottom lines will hinge entirely on the duration of the geopolitical shock. Analysts flagged severe upside risks if the conflict forces a closure of the Strait of Hormuz or halts Qatar’s LNG output. Both are vital global energy arteries, with each supplying approximately half of India’s overall crude and LNG imports.
If the disruption extends beyond the one-month period currently priced into the market, Citi projects a sharp tightening in global supply. Coupled with anticipated low European storage levels heading into October 2026, the brokerage warned of a growing risk of "non-linear" price spikes across the energy complex.
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