Home Market News HPCL, BPCL shares fall up to 4% after Brent crude crosses $70 per barrel mark
Rising oil prices are generally beneficial for upstream oil explorers such as Oil India and ONGC as it will result in the increase in prices of the products refined by them.
Shares of India’s downstream oil refiners, Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Petroleum Corporation Ltd. (BPCL), Indian Oil Corporation Ltd. (IOC), fell up to 4% on Thursday, June 12, in response to a surge in crude oil prices globally.
Brent Crude crossed the mark of $70 per barrel due to rising geopolitical tensions in the Middle East as hopes of a nuclear deal between Iran and the US continued to fade. AFP also reported that Iran threatened to attack US military bases in the region if a conflict is imposed on them.
The UK Navy also issued a rare warning to mariners that higher tensions in the Middle East could affect shipping.
Rising oil prices are negative for oil sensitives such as oil marketing companies such as Hindustan Petroleum Corporation Ltd., Bharat Petroleum Corporation Ltd . and Indian Oil Corporation Ltd
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This increases its raw material costs, thereby affecting their margin.
Meanwhile, rising oil prices are generally beneficial for upstream oil explorers such as Oil India and ONGC as it will result in the increase in prices of the products refined by them. Oil India shares are up 3%, while ONGC is up 2%. Oil India is up for the second day in a row after a 7% surge on Wednesday on the back of a positive brokerage note from Avendus Spark.
Additionally, the US oil body, Energy Information Administration (EIA) released its crude outlook on Wednesday, which stated that the commodity would move lower in the short term. It said the rising global oil inventories would drive crude oil prices lower.
The West Texas Intermediate increased 1.7% to $69.29, while Brent settled just shy of $70 on Thursday. Oil prices had seen their biggest single-day surge overnight since October last year.
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