OMC Stocks Plunge as Crude Oil Heads for Best Week Since 2022 Amid Israel-Iran Conflict

Oil marketing companies' shares plummeted as much as 6% on Friday, June 13, after crude oil prices surged following an Israeli airstrike on Iran. The escalation raised concerns across global markets, as the Middle East accounts for nearly a third of the world’s crude production, and any fresh conflict could threaten supply chain stability.

At 10:11 am, shares of downstream oil marketing companies such as Bharat Petroleum, Hindustan Petroleum and Indian Oil Corp. were down 2-3% on Friday, as rising tensions in the Middle East weighed on the investors’ sentiment. On the other hand, shares of upstream oil companies such as Oil and Natural Gas Corp. and Oil India climbed 1% and 2% on bourses, respectively. Overall, the Nifty Oil & Gas index was down 1.3%.

The upward trend in oil prices often bodes well for upstream companies, while it hurts the earnings of the downstream companies due to margin pressures on refined products.

Israeli Prime Minister Benjamin Netanyahu said that the attacks on Iran targeted its nuclear program and military capabilities, and would last until the threat was removed, Bloomberg reported. Futures contract for Brent crude oil climbed up to 13% to almost a five-month high of $78.50. With this rally, the price is hovering just 11% below the 52-week high level. West Texas Intermediate Crude oil prices also surged up to 14% to trim the gap with its 52-week high level.

Crude oil prices are on course for the biggest weekly gain since 2022 amid the spike in tensions in the Middle East. With the recent rally, it has pared year-to-date losses, which was driven by the fall-out from global trade tensions and a revival of production by OPEC+. According to a Bloomberg’s report, JPMorgan Chase & Co., had warned this week that prices could reach $130 a barrel in a worst-case scenario in the Middle East.

Oil prices have surged recently, due to increasing tensions between the US and Iran. This uptick came after the crude oil prices went through a period of downturn.