
Shares of state-run oil marketing companies such as Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL) and Indian Oil Corporation Ltd. (IOCL) slipped up to 2 per cent in Tuesday's late deals. HPCL and BPCL shares declined 1.66 per cent and 1.62 per cent, respectively, while IOCL cracked 2.39 per cent.
The decline came after it was reported -- citing oil ministry sources -- that the Centre believes conditions are favourable for a fuel price cut as oil marketing companies' (OMCs') gains from the sale of petrol and diesel have increased. The ET Now report said the oil ministry expects crude prices to remain within a stable range.
The potential reduction in fuel prices comes as a welcome relief to consumers, but it has weighed on the shares of OMCs, which may face margin pressures if the government moves forward with the cuts.
Last seen on Tuesday, Brent futures fell 14 cents or 0.22 per cent to $62.55 a barrel while US West Texas Intermediate (WTI) crude futures were down 8 cents or 0.12 per cent at $62.55. India relies on imports for more than 85 per cent of its crude oil needs, which are processed into fuels in domestic refineries.
The fall in Brent crude usually benefits OMCs as the decline in crude prices lowers their input costs.
In a separate development, Union Oil Minister Hardeep Singh Puri stated in April that there is room to cut fuel prices for the Indian OMCs if softer crude oil rates continue.
Meanwhile, domestic benchmarks tumbled today as all sectoral indices dragged. The 30-share BSE Sensex pack slumped 873 points or 1.06 per cent to close at 81,186 and the broader NSE Nifty index plunged 262 points or 1.05 per cent to settle at 24,684.