Crude Oil Price Drop and Its Ripple Effect on Indian Oil Companies

Key Highlights:

• Crude Falls to $65.72/bbl: The end of the Iran-Israel conflict triggered a steep price correction, offering relief to refiners but denting upstream profitability.
   
• Stable Domestic Prices: Petroleum product prices across VG40, Base Oils, Furnace Oils, and Lubricants remained unchanged amid global volatility.
   
• Refiners Benefit: HPCL, BPCL, and Indian Oil expected to improve margins on cheaper crude, especially with diesel and jet fuel prices holding firm.
   
• Upstream Pressure: Oil India and ONGC stocks underperformed as lower crude realizations threaten revenue and profitability in the near term.

Domestic Oil and Petroleum Price Overview

• Roadgrip Bitumen (VG40) in bulk is available in Karwar at ₹37,590 per metric ton. Refinery Bitumen (VG30) in bulk is priced at ₹47,722 per metric ton in Mathura.
• Roadgrip Bitumen Emulsion RS-1 in bulk is priced at ₹32,990 per metric ton, and SS-1 in drum packaging is ₹34,090 per metric ton, both in Pithampur. 
• Base Oil SN150 in barrels is being sold in Delhi at ₹68 per kg, while the same grade in bulk is available in Kandla at ₹63 per litre. 
• Low Sulphur Heavy Stock (LSHS) Fuel Oil in bulk is priced at ₹50.75 per kg in Jamnagar, and 180cST Furnace Oil in bulk is at ₹50.5 per kg in Mumbai. 
• Sephan Rubber Process Oil (Aromatic) in barrels is ₹46 per kg, and PARS Rubber Process Oil (Aromatic) in bulk is ₹44.5 per kg, both in Mundra.
• In Bhiwadi, LubriEdge Hydraulic Oil 68 is priced at ₹91 per litre in buckets and ₹87 per litre in barrels. 
• LubriEdge Gear Oil 150 in barrels is priced at ₹115 per litre. LubriEdge Rust Preventive Oil (Water Displacing WDM) in barrels is ₹122 per litre. 
• LubriEdge Metal Working Fluid (Soluble Cutting Oil) is priced at ₹112 per litre for both bucket and barrel variants.

Demand-Supply Balance Post Ceasefire

• The global crude oil market is witnessing a significant shift following geopolitical developments, most notably the ceasefire announcement between Iran and Israel. As of 24 June 2025, crude prices plunged by nearly 5% to $65.72 per barrel, marking a steep correction from recent highs. This decline can be attributed to the easing of war-related tensions, the end of the 12-day conflict, and a rebalancing of speculative positions in the futures market.
• From a supply standpoint, the return of stability in the Middle East is expected to normalize oil exports from the region, easing earlier disruptions. Additionally, OPEC+ production levels remain largely unchanged, with members likely to reassess output decisions depending on how demand unfolds in the second half of 2025.
• On the demand side, global consumption remains cautious. India and China, two of Asia’s largest oil consumers, are still grappling with uneven industrial output, and stockpiles remain healthy due to prior inventory build-ups. This dampens the urgency to import at current levels, reinforcing a softer demand outlook.
• Domestically, the lower crude prices offer a breather to refining companies who had been facing tight margins due to input cost volatility. However, upstream exploration firms like Oil India and ONGC are bearing the brunt, as revenue generation becomes strained at lower crude realizations.

Oil and Petroleum Market News

• The recent downturn in crude oil prices has caused divergent impacts across the Indian oil sector. Upstream firms such as Oil India and ONGC, which rely on higher crude prices for profitability, are witnessing margin pressure. 
• For instance, Oil India’s stock dropped by 4.28%, currently trading at ₹452.05, and recorded a five-day decline of 1.80%. While its TTM P/E stands at 9.60 (slightly below the industry average of 10.13), analyst sentiment remains mixed. Out of total coverage, 11 analysts have issued a ‘Strong Buy’ rating, 4 have recommended a ‘Buy’, while one has downgraded the stock to ‘Sell’.
• Despite short-term headwinds, institutional sentiment appears stable with mutual fund holdings at 9.14% as of March 2025. However, foreign institutional holdings dipped to 8.51%, reflecting global caution around upstream oil exposure amid falling prices.
• Conversely, refining majors such as HPCL, BPCL, and Indian Oil are experiencing a favorable environment. Lower crude input costs are supporting higher refining margins, especially for end products like diesel and jet fuel, which haven’t seen equivalent price drops. 
• HPCL has outperformed recently in the stock market, and similar momentum is expected for BPCL and Indian Oil, given the opportunity to boost profitability and expand market share during this price window.

Market Expectation: Refiners vs. Upstream Players

Going forward, Indian oil companies are expected to experience a polarized performance. Upstream players may remain under pressure unless global oil prices recover above $70–72 per barrel. In contrast, downstream refiners are well-positioned to capitalize on lower input costs in the short term. Market participants are advised to monitor geopolitical stability and U.S.-Middle East developments closely, as any renewed tensions could again reverse price trends.