Shares of oil marketing companies (OMCs) came under pressure on Monday after the government sharply increased windfall taxes on fuel exports, while a surge in global crude oil prices added to investor concerns. Stocks of Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and Reliance Industries remained in focus amid the dual impact of policy tightening and geopolitical tensions.
The Finance Ministry on Saturday raised the windfall gain tax on export-bound diesel by over 158 per cent and on aviation turbine fuel (ATF) by 42 per cent This marks the first revision since the levy was reimposed on March 26. As per official notifications, the levy on diesel has been increased to ₹55.5 per litre from ₹21.5 per litre earlier. Similarly, export-bound jet fuel will now attract a duty of ₹42 per litre compared to ₹29.5 per litre previously, while export duty on petrol continues to remain nil.
Reacting to the developments, Indian Oil Corporation shares declined 3.7 per cent in early trade to ₹137.56 from the previous close of ₹142.96 on the NSE. Bharat Petroleum fell 5 per cent to ₹284.25, compared to ₹299.35 earlier, while Hindustan Petroleum dropped 5.4 per cent to ₹340.80 from ₹360.60. Reliance Industries also slipped nearly 3 per cent to ₹1,311 from ₹1,350.20.
The weakness in OMC stocks was further exacerbated by rising crude oil prices following stalled negotiations between Washington and Tehran. With no agreement reached, the United States is reportedly planning stricter measures, including a blockade of maritime traffic linked to Iranian ports. This has pushed Brent crude prices higher over $102 per barrel, raising concerns over input cost pressures for downstream oil companies.
Higher crude prices typically compress marketing margins for OMCs, making the sector particularly sensitive to geopolitical developments. The current scenario is seen as negative not only for OMCs but also for airline companies and sectors such as chemicals, paints, tyres and plastics that rely heavily on petroleum derivatives.
Reflecting this trend, airline stocks also witnessed volatility, with IndiGo shares falling over 3 per cent, while SpiceJet bucked the trend with a 5 per cent gain at the time of writing.
Meanwhile, upstream oil companies such as ONGC and Oil India, which usually benefit from higher crude prices, pared early gains amid a broader market downturn, indicating cautious investor sentiment across the energy space.