Cooling crude oil price sends Indian Oil, BPCL, HPCL shares soaring - what investors may do

Crude oil price effect: Shares in state-run oil marketing companies Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HINDPETRO) jumped on March 16, a day after international crude oil benchmarks eased to their lowest levels recorded in more than a year. Brent and US WTI crude oil prices fell around five per cent each to $73.7 per barrel and $67.6 per barrel respectively.

Analysts say cooling crude oil prices are set to benefit the oil marketing companies. 

At 2 pm, here's how the three PSU OMC stocks fared on BSE: 

• Indian Oil (IOC): up by Re 1.3 or 1.6 per cent at Rs 80 apiece
• Bharat Petroleum (BPCL): up by Rs 19.9 or six per cent at Rs 350 per share
• Hindustan Petroleum: up by Rs 15 or 6.5 per cent at Rs 245.5 apiece

All the three stocks were not far from their strongest levels in intraday trade. IOC shares gained as much as 1.9 per cent to Rs 80.2 apiece, BPCL 5.3 per cent to Rs 347.8 apiece and HINDPETRO 6.5 per cent to Rs 245.5 apiece earlier in the day. 

What's driving state-run OMC stocks IOC, BPCL, HINDPETRO

The more than one-year lows in the two global oil benchmarks — Brent and WTI — came about amid concerns about contagion in the world's financial system thanks to fresh problems in Switzerland-based Credit Suisse and the sudden collapse of US-based Silicon Valley Bank (SVB).

Analysts say worries whether the turmoil in major financial companies may send the world economy into a recession, affecting global demand, also played out in the oil market.

Falling crude oil prices are positive for India, which meets the lion's share of its oil requirement through imports.

What analysts say

Avendus Capital upgraded each of the three OMC stocks to 'buy' from 'add'. According to the brokerage, cheaper crude oil will aid the marketing margins of the oil marketing companies, and will likely improve their gross refining margins (GRMs) in the long run. 

Here are the target prices laid out by Avendus:

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