OMC Stocks On Fire As Iran-Israel Conflict Boils Oil! ONGC, Oil India Jump — HPCL, BPCL Slip – What Should Investors Do Now?

OMC Stock Today: Oil prices remained volatile on Monday after a sharp 7% surge on Friday, driven by renewed military strikes between Israel and Iran. These developments have raised fears of a broader regional conflict and disruptions in oil exports from the Middle East.

Brent crude edged up slightly to $74.29 a barrel, while US WTI crude was at $73.19. Both benchmarks had risen over $4 earlier in the session before briefly slipping into negative territory.

In India, crude oil futures on the Multi Commodity Exchange (MCX) opened higher at Rs 6,343 per barrel, up 1.05%. On Friday, prices jumped 7.77%. Tensions in the Middle East are stoking fears of supply disruptions, particularly through the critical Strait of Hormuz, a route that handles about 20% of global oil and LNG shipments.

What Should Investors Do?

JM Financial noted, “Brent crude price has risen by a sharp ~7% to ~USD 74/bbl driven by fears of a significant disruption in Iran’s crude oil exports of 1.5-2.0 mmbpd out of its total output of ~3.4 mmbpd, either via attacks on Iranian energy infrastructure or tighter US sanctions. A disruption of 0.5-1 mmbpd can add USD 5–10/bbl to prices, though Brent is unlikely to rise above USD 80/bbl due to existing oversupply and Saudi Arabia’s spare capacity of ~2 mmbpd.”

JM Financial added that while there’s a huge upside risk if Iran disrupts supply through the Strait of Hormuz, the probability remains low. Historically, the strait has never been blocked, even during wars, and any attempt would likely be countered by strong Western intervention.

The firm expects Brent crude to remain in the $70–80/bbl range in the near term and stabilise near $70 once tensions ease.

Amid the surge in global oil prices, upstream companies like ONGC and Oil India saw gains. ONGC rose 1.63% to Rs 255.50, while Oil India climbed 0.70% to Rs 481.20.

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JM Financial maintains a BUY rating on both, noting their valuations are based on $65/bbl crude prices and each $1 increase in oil prices boosts their EPS by 1.5–2%. They also highlighted strong production growth prospects—15% for ONGC and 25% for Oil India over the next 1–3 years.

On the flip side, oil marketing companies (OMCs) like HPCL, BPCL, and IOC fell sharply due to margin pressures from higher crude. HPCL fell 4.6%, BPCL dropped 3.6%, and IOC slipped 1.38%. JM Financial maintains a SELL on HPCL and IOC and a HOLD on BPCL, citing unfavourable risk-reward ratios, high capex plans, and valuations trading 10–30% above historical averages.

Further pressure came from the government’s decision to hike excise duty on petrol and diesel by Rs 2 per litre each. Although retail prices may not immediately rise, the move is seen as adjusting for prior price cuts linked to falling global rates.

Still, some analysts see the dip in OMC stocks as a long-term buying opportunity. Nilesh Jain, Vice President at Centrum Broking, said, “OMC stocks are under pressure due to crude’s sharp rise, but some recovery is visible. IOC, in particular, looks attractive with support at Rs 137 and an upside target of Rs 160.”

Meanwhile, global leaders are watching the escalating tensions closely. US President Donald Trump expressed hope for a ceasefire but warned the region “could be a dangerous place”. German Chancellor Friedrich Merz is pushing for a G7 resolution to contain the conflict.

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