CPCL, MRPL, HPCL, BPCL, IOC shares: Brent nears $102; impact on oil stocks

With November Brent crude oil futures hitting a high of $101.94 a barrel mark, Choice Institutional Equities on Thursday said higher crude prices remained a headwind for oil marketing companies (OMCs) namely BPCL, HPCL and IOC, adding that Chennai Petroleum Corporation Ltd (CPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL) may continue to benefit from strengthening diesel cracks, with diesel prices rising faster than crude.

Choice said the upcoming September–November refinery maintenance cycle should further tighten product availability and provide additional support to refining margins. It suggested a target of Rs 215 for MRPL and Rs 1,540 for CPCL.

Choice expects Brent price to average at $84 per barrel for FY27 and $86 per barrel for the ongoing quarter.

Unlike crude prices, diesel faces a deeper structural supply constraint as Middle Eastern and Russian flows remain disrupted while global refiners operate near capacity, the domestic brokerage said. It expects tight inventories and winter demand to sustain elevated diesel cracks.

Overall, it expects a renewed US-Iran escalation and continued disruption through the Strait of Hormuz to keep a geopolitical premium embedded in crude, with Brent likely to remain elevated unless there is a credible path towards de-escalation.

Oil prices have extended gains of late as renewed US-Iran hostilities and threats of further escalation heightened concerns over Strait of Hormuz disruptions.

Brent price have been supported by stronger Chinese buying that further tightened global oil markets. "However, elevated crude prices could pressure independent refinery runs and demand," Choice said.

Global diesel markets remain structurally tight as Middle East supply disruptions and Ukrainian strikes constrain Russian refinery exports. Refiners elsewhere are operating near capacity, while inventories continue to decline. This supply tightness is adding to inflationary pressures and increasing winter supply risks, particularly in Europe.

"US diesel inventories are projected to fall below 100 Mn barrels, their lowest level since 2003, amid supply disruptions stemming from the Middle East and Russia-Ukraine conflicts. Reflecting this tightening, the EIA raised its Q4CY26 retail diesel price forecast by 14 per cent to $5.55/gallon, further adding to inflationary pressures," Choice noted.