Crude oil is surging on rising tension between Israel and Iran, and the Indian downstream oil marketing companies are facing the heat. Brent Crude prices soared after Israel conducted airstrikes on Iran. The tension across West Asia has raised supply worries, and this is impacting the share price of Indian Oil marketing companies.

Nifty Oil & Gas Index slides over 1.4%

The basket of oil & gas companies, Nifty Oil & Gas, fell over 1.4% to trade at 11,318.10. Indraprashta Gas was struck the most by the uptick in crude oil prices as the city gas distributors’ share price fell 5% to an intra-day low of Rs 193.12 in the early trade hours. The big losers on the Nifty Oil and Gas Index include BP, HP, and many natural gas plays like IGL as well.

Downstream OMCs drop 6%

IGL has seen he maximum hit in trade today. This is followed closely by the share price of Bharat Petroleum Corporation, which lost as much as 6% in early trade. The share price of Hindustan Petroleum dropped more than 3% to Rs 380.25. GAIL share price corrected 3.6%. There were many other oil & gas stocks that fell over 2% in today’s trade. You can check the list of petroleum stocks under pressure in today’s trade on Financial Express.com.

Upstream oil companies rise

However, the share price of Oil India (OIL) surged by 3.8% to an intra-day high of Rs 486, and the stock price of Oil and Natural Gas Corporation (ONGC) eked out 3.2% gains to Rs 255.95. Both OIL and ONGC are upstream OMCs and can potentially benefit from a higher crude rate. This is one of the key triggers why the share prices of these stocks are scaling higher.

What’s the difference between upstream oil companies and OMCs?

The upstream oil companies include companies that are involved in the exploration, development, and production of crude oil and natural gas. Meanwhile, the OMCs or downstream oil companies that sell petroleum products like gasoline, diesel, and other petrochemicals after the crude oil is extracted and transported. They buy crude oil from oil exploration companies to make the finished product.

Israel-Iran conflict

Israel launched “preemptive” strikes on Iran late Thursday night, targeting Iran’s nuclear facility and military camps. After that, Israeli Defence Minister Israel Katz declared a state of emergency in the country and said that retaliatory action from Tehran is possible following the operation. “Following the State of Israel’s preemptive strike against Iran, a missile and drone attack against the State of Israel and its civilian population is expected in the immediate future,” Katz said.