As of 24 June, the international oil market regarding crude oil is witnessing a significant downfall, making it fall by 5% to $65.72. This comes at the moment that the US President Donald Trump announced a ceasefire between Iran and Israel. The market has also been responding to the termination of the 12-day war, with the prices of crude oil having recorded a sharp decline to below $70 a barrel. This fall in oil prices will affect the upstream and downstream oil companies in India. Moreover, the negative effect will be felt by companies such as Oil India, and the positive effect will be felt by the Hindustan Petroleum Corp (HPCL).

The Effects of Falling Crude Oil Prices on Indian Oil Companies

The fall in prices of crude oil has created a lot of pressure on the stock prices of Indian oil companies. In the case of upstream firms such as ONGC and Oil India, the downturn in terms of oil prices is usually met with a corresponding decline in revenues and profit margins. This is because companies are sensitive to changes in crude prices as these firms operate in the extraction of oil. When oil prices become globally lower, the upstream business turns out to be less profitable, and Oil India demonstrates such tendencies.

Image 1- Return Comparison, published on Mint Market, 24 June 2025

An example can be cited as Oil India, which is valued at Rs 452.05, which implies that it has depreciated by 4.28%. It is traded between Rs 465.45 and Rs 451.60, and this year, it has given a 9.62% return. However, it has recorded a five-day drop of 1.80%. TTM P/E ratio is $9.60 against the industry average of 10.13. The analysts are quite positive in regard to the future of the company, with 11 of them suggesting a strong buy and four imparting a suggestion of buy. Nevertheless, there is a divided opinion on the long-term prospects of the company, as one analyst has put the stock under a sell rating.

The Positive Impact of Lower Oil Prices on Refining Companies

The downstream refining and production industries, such as HPCL, BPCL, and Indian Oil, are enjoying the benefit of decreasing crude prices. These are the companies that engage in the refining of crude oil into complete products such as gas, diesel, and jet fuel. Their refining margin goes up as the price of crude oil falls, resulting in them gaining higher profitability. This is true because the price of crude materials will fall, and the cost of the products that have undergone refinement operations may not change significantly.

HPCL is considered one of the companies that have taken advantage of the reduction in crude prices, showing a positive performance lately in the stock market. BPCL and Indian Oil can also get the windfall of the positive market. The situation is an opportunity, as such companies may increase their market share. Moreover, they may improve their profit margin by having a more efficient operation.

Future of Oil India and its Marketplace

Oil India is one of the significant players in the Indian oil and gas industry despite the present downturn in crude oil prices. Stocks of this company have performed differently. The mutual fund holding of 9.14% on 31 March 2025 reveals investors’ confidence by institutions. The FII (Foreign Institutional Investor) holding, however, fell to 8.51% in the current period as compared to the last quarter. This is a clear sign of a jittery outlook by foreign investors.

The management of Oil India must deal with the challenge of operating in volatile oil markets all over the world. Since it is expected that the prices of crude oil will keep fluctuating in the near future, the company should give priority to operational efficiency, cost management, and strategic investment. This is to enable the mitigation of risks and capitalize on the opportunities that the dynamics of the new market would bring.

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