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The Indian oil marketing companies (OMCs) are facing one of their worst monthly falls on record as the spike in global crude oil prices to levels not seen in the last four years is weighing significantly on their balance sheets.

The ongoing US-Israeli war with Iran has resulted in the closure of the Strait of Hormuz, through which 20% of the global crude oil flows and over 40% of India's crude imports transit. This, along with attacks on gas and oil facilities in the region, has driven the Brent crude futures past the $100 mark. At one point, prices touched almost $120/barrel.

OMCs operate with a counter-cyclical leverage model, i.e. when losses or margin pressures emerge, debt rises sharply to absorb working capital & under-recoveries.

This reinforces the risk that in the current crude upcycle, if marketing losses persist without price pass-through, balance sheets could again see meaningful stress through rising debt levels, according to Equirus Research.

Indian OMCs’ retail selling prices have stayed largely unchanged since April 2022. As a result, retail losses have now widened. ICICI Securities estimates that average retail margins are at a negative ₹1/litre for petrol and negative ₹13.5/litre for diesel for March 2026.

Against this backdrop, OMC stocks like Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (BPLC) have lost 23-25% in March so far. IOC and BPCL shares are set for the worst monthly fall since the Covid-19 crisis six years ago, while HPCL stock is set to fall the most since the Global Financial Crisis, according to Trendlyne data.

However, this correction is relatively limited when compared to past instances. According to Equirus, this can be attributed to the market's view that the crude spike may be temporary amid potential global supply additions, while stocks are trading near their historical valuation.

Past periods of major crude oil price spikes, such as the 2011-2013 subsidy cycle, the 2018 crude price spike and the Russia invasion of Ukraine in 2022, have led to significant corrections in OMC stocks.

During these periods, OMCs typically corrected ~30-60%, with stress cycles lasting 6-24 months amid pressure on marketing margins and delayed retail fuel price pass-throughs, added the brokerage.

All three OMC stocks entered this crisis at already-compressed multiples, but 'cheap on paper can get cheaper' if the disruption is prolonged and the GoI delays retail price relief, cautioned the brokerages.

ICICI Securities bakes in at least two more months of impact for the OMCs in the revised EPS estimates (Apr–May’26), which drives a material 44/52/76% downgrade in earnings for FY27E for IOCL/BPCL/HPCL.

Furthermore, its analysis of one-year forward multiples, over the last three crises, implies that the pain may extend for another 15-20% from here, especially if the conflict lingers for another 60 days (our base case).

"Having said that, we note a normalisation of the event and rerating implies a material 32–44% upside potential from the bottom. Coupled with the strengthening of their balance sheets over the last two years, we see material upside as and when the resolution happens for this crisis," it added.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.Saloni Goel has over nine years of experience as a business journalist, with a strong track record of covering the financial markets. Over the course of her career, she has reported extensively on global and domestic equities, IPO market activity, commodities, and broader macroeconomic trends. Her reporting reflects a keen eye for detail, data-driven analysis, and the ability to spot emerging themes early.

At Mint, Saloni has been part of the markets team for nearly two years, where she currently works as Chief Content Producer. In this role, she plays a key part in shaping market coverage, driving editorial strategy, and ensuring timely, accurate, and insightful reporting across. She has been closely involved in breaking news coverage and in crafting stories that help decode the complex financial developments.

Before joining Mint, Saloni worked with some of India’s leading business newsrooms, including The Economic Times and Business Standard. Throughout her career, she has worn multiple hats—ranging from reporting and editing to contributing in-depth features and identifying new storytelling formats and market trends.

Her experience in fast-paced digital newsrooms has given her an edge in simplifying complex market concepts without losing analytical depth. Outside of work, Saloni enjoys reading books and spending time with her pet.

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