Shares of oil marketing companies (OMCs) hogged the limelight in trade today, May 25, as crude oil cooled to a two-week low and the government implemented a fourth hike in domestic fuel prices to cap losses for these oil PSUs amid rising international crude costs.
Hindustan Petroleum Corporation Limited (HPCL) led the gainers, with its shares rising 5.8%to ₹412.55 apiece. It was followed by Bharat Petroleum Corporation Limited (BPCL), whose stock added 4.44% to ₹308.70. Meanwhile, Indian Oil Corporation (IOC) jumped 3.90% to ₹144.95 on the BSE today.
With today’s rise, OMC stocks have turned positive for May and are set to close in the green for the second month in a row. However, in 2026 so far, their shares are down 13-20%.
Why are OMC stocks rising?
OMCs have been under pressure since the onset of the war in the Middle East, which has pushed the global crude oil prices higher. However, a decline in crude oil prices to below $98 per barrel earlier today amid hopes of an end to the West Asia crisis and the opening of the Strait of Hormuz — a critical chokepoint for 20% of global oil passage — has propped up these oil PSU stocks.
Higher crude oil prices threaten to squeeze OMCs’ refining and marketing margins and vice versa.
Brent crude futures fell $5.85, or 5.7%, to $97.69 a barrel while US West Texas Intermediate were at $90.85 a barrel, down $5.75, or 6%. Both contracts touched their lowest since May 7 earlier in the session.
JM Financial, in a note on 18 May, had said that OMCs could incur Q1FY27 under-recoveries of ~ ₹84500 crore or ₹920 crore/day and a cash loss of ₹54000 crore or ₹580 crore/day, which implies potential for ~10% erosion in OMCs’ book value by end-Q1FY27E.
However, it added that OMCs have balance sheet strength to absorb current quarterly under-recoveries for two–three quarters (current net debt-to-equity comfortable at ~0.52x versus 1.16x during the Russia crisis).
Meanwhile, in a bid to ease the pressure on OMCs, the government has announced a fourth hike in petrol and diesel prices today. Diesel prices have increased by Rs. 2.71 per litre and petrol by Rs. 2.61 per litre, taking petrol in Delhi to ₹102.12.
With the latest revision, cumulative increases in petrol and diesel prices amount to nearly ₹7.5 per litre since fuel rate revisions resumed on 15 May after a prolonged freeze.
JM Financial, after the first fuel hike of almost ₹3 earlier in May, had stated that OMCs need a fuel hike of ₹6–9/litre to avoid EBITDA loss and ₹14–17/ltr to earn normalised EBITDA.
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