Energy Sector Sees Divergence as Crude Soars: ONGC Rises, BPCL Falls
Indian upstream crude producers ONGC and Oil India were among the top performers today, as crude oil prices in the global markets rose more than 10% after Israel struck Iranian nuclear sites.
As of 11:40 AM, ONGC rose 1.64% to ₹251.85, while Oil India rose 2.84% to ₹481.65, going against the overall cautious mood in the market. The rally in these stocks was supported on the back of the anticipation of better realisations and profitability, with higher crude prices boosting exploration and production firms, which directly benefited from it.
Market players were looking at the potential for additional upside, with JP Morgan cautioning that crude may spike to $130 a barrel should the geopolitical crisis deepen further. Brent crude August futures jumped as high as 13.8% to $78.50 a barrel, the highest since January, before tapering off above $75 in early trading.
Downstream Oil Marketing Companies Under Pressure
Contrary to that, oil marketing firms like Indian Oil Corporation (IOCL) and Bharat Petroleum Corporation (BPCL) saw heavy selling pressure. Shares of IOCL fell 1.46% to ₹140.90, while BPCL fell 2.62% to ₹310.30. The increase in crude prices has spooked margin compression worries for OMCs as their cost of input increases while their retail fuel prices stay stable due to consistent price freezes. This volatility constrains the capacity of OMCs to transfer increased costs to end-users, aggravating concerns over short-term profitability.
Wider Market and Sectoral Impact
The increase in crude prices also impacted oil-sensitive industries away from the direct value chain of oil. Shares like Asian Paints and InterGlobe Aviation (IndiGo) were pressured, indicating the general effect of increasing input and fuel prices on consumer and aviation firms.
The performance divergence between upstream and downstream players in the oil space was followed by a subdued sentiment across the equities market, with investors migrating towards safe-haven instruments like gold.
Geopolitical Risk and Market Outlook
The recent upsurge in West Asia has poured enormous volatility into world energy markets. Iran, one of the world's largest oil exporters, has promised retaliation, threatening the spectre of increased supply disruptions.
Analysts said the situation is highly fluid and that any further escalation would drive crude prices even higher, exacerbating the difficulties for downstream firms and oil-intensive industries.
JP Morgan's alert about crude possibly hitting $130 per barrel highlights the increased uncertainty confronting global and domestic markets. Upstream producers such as ONGC and Oil India are currently perceived as relative beneficiaries until now, while OMCs and oil-sensitive industries could remain under pressure as the crisis unwinds.
The dramatic difference in performance between upstream and downstream oil shares on June 13, 2025, reflects the immediate effect of movements in global crude prices on India's energy space. While geopolitical tensions in the Middle East continue to trouble markets, investors would continue to be interested in events in the region and their implications on oil prices, industry margins, and overall market mood.
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