Oil retailer stocks drop as crude prices cross $100 amid US Naval blockade

Shares of major fuel retailers Hindustan Petroleum Corporation Ltd (HPCL), Indian Oil Corporation Ltd (IOCL), and Bharat Petroleum Corporation Ltd (BPCL) dropped up to 4 percent on Monday. This decline followed an 8 percent surge in global oil prices, which pushed crude back above the $100 per barrel mark. The price jump came after the US Navy blocked ships from accessing Iran, a move that could restrict Iranian oil exports.

Key Highlights

• HPCL, BPCL, and IOCL shares fell up to 4 percent after oil surged above 100 dollars per barrel
• US Navy blocked ships from Iran following failed talks escalating tensions and risking the ceasefire
• Upstream oil companies ONGC and OIL gained about 1 percent as crude prices rose
• Brokerages revised target prices for HPCL, BPCL, and IOCL amid ongoing Middle East conflict
• Analysts expect crude to remain volatile with potential to reach 150 dollars per barrel if disruptions continue

The US action followed failed talks between Washington and Tehran over the weekend in Islamabad. The breakdown in negotiations has put a fragile two-week ceasefire at risk. Despite the ceasefire technically remaining in place, oil markets have reverted to pre-ceasefire dynamics, as seen in the sharp rebound in prices. Oil prices had previously fallen by up to 15 percent in a single day after the ceasefire was announced.

Stock Market Impact

On the National Stock Exchange, HPCL shares were down 4 percent at Rs 345.20. BPCL shares fell over 3 percent to Rs 284.25, while IOC declined 3 percent to Rs 138.60. In contrast, upstream oil companies such as Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) gained about 1 percent. These companies benefit from higher crude prices.

US President Donald Trump announced on Sunday that the Navy would begin a blockade of the Strait. This move escalated tensions after marathon negotiations with Iran failed to produce a deal. Iran's Revolutionary Guards warned that any military vessels approaching the Strait would be treated as a violation of the ceasefire and dealt with firmly. Trump also stated that oil and gasoline prices could remain high through the November midterm elections.

Brokerage and Analyst Views

Last month, UBS downgraded HPCL, BPCL, and IOCL due to rising uncertainty from the US and Israel-Iran conflict. UBS revised its target prices to Rs 175 for IOCL from Rs 190, Rs 365 for BPCL from Rs 425, and Rs 340 for HPCL from Rs 540. Macquarie noted that even if tensions ease, oil prices are likely to stay in the $85 to $90 range, with a gradual move towards $110 as flows through the Strait normalize. If disruptions continue through April, Brent crude could rise to $150 per barrel.

Kayanat Chainwala of Kotak Securities said oil may rise to $120 per barrel in the near term and could reach $150 if the conflict persists. Nuvama Institutional Equities offered a similar outlook. The continued closure of the Strait of Hormuz, which handles about 20 million barrels per day, could push crude prices to the $110-150 per barrel range.

Ajit Mishra, Senior Vice President at Religare Broking, said the current ceasefire is temporary. A return to pre-war levels of $70 to $75 per barrel could take several months. In the near term, he expects crude to trade between $80 and $85 on the downside and $95 to $100 on the upside.

Analysts agree that as long as tensions persist, crude prices will remain volatile with an upward bias. Ongoing disruptions in the Middle East, especially around the Strait of Hormuz, are likely to keep supply tight and support higher Brent and WTI prices, maintaining global inflationary pressures.

Also Read: Global oil prices surge amid Saudi Energy attacks and Strait of Hormuz Shutdown

CarBike 360 Says

​The surge in crude prices and the resulting fall in oil retailer shares highlight the sensitivity of global markets to geopolitical tensions. As the US Navy blockade continues to disrupt supply routes, investors and policymakers alike are closely monitoring developments, hoping for stabilization in energy prices and renewed confidence across the global economic landscape.