HPCL, BPCL, IOC shares down 1% as Brent crude tops $72 amid US-Iran tensions

Shares of oil marketers Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL), and Indian Oil Corporation (IOC) were down nearly 1% each in early trade on February 20 as brent crude rose sharply to $72/bbl on escalating US-Iran tensions.Upstream companies like Oil and Natural Gas Corporation (ONGC) and Oil India were in the green.

Crude oil prices have surged to a six-month high, rising nearly 5% this week and about 15% so far this year, as geopolitical tensions in West Asia continue to build.
Markets are now factoring in what analysts describe as a possible “war premium” of $10-$12 per barrel, after the United States President reportedly set a 10–15 day deadline for nuclear deal talks with Iran.The US has also deployed its largest military force in the Middle East since the 2003 Iraq invasion, raising concerns about potential disruption to global oil supply.

One of the biggest risks being closely watched is the Strait of Hormuz, a narrow shipping route through which nearly 13 million barrels per day pass, accounting for about 31% of all seaborne crude oil globally. Any escalation in US-Iran conflict could prompt Iran to restrict traffic through this route, tightening supply and pushing prices higher.

Adding to the uncertainty, Russia and Iran recently conducted joint naval drills in the Gulf of Oman, while US and Israeli officials are expected to discuss Iran-related developments on February 28.

Geopolitical tensions are not limited to West Asia. Diplomatic efforts between Russia and Ukraine remain stalled, while strong US economic data and hawkish signals from the US Federal Reserve have also supported oil prices.

Supply-side factors are also contributing to the rally. US crude inventories fell by 9 million barrels this week, while sanctioned crude inventories currently held on water stand at around 375 million barrels, according to Goldman Sachs.