Reliance, ONGC, OIL, BPCL, IOCL, HPCL, GAIL Shares Crash: Why Oil & Gas Stocks Are Falling? 3 Reasons

Oil and gas stocks crashed sharply on April 13, due to a bundle of reasons. At the top of the list are the failed peace talks between US-Iran. Second dagger is from a sharp surge in crude oil prices to above $105 per barrel. Then comes the imposing of a windfall tax on diesel for refiners. Heavyweight Reliance Industries plunged sharply by 3%, dragging both Sensex and Nifty steeply. Meanwhile, stocks like ONGC, Oil India, BPCL, Indian Oil, HPCL, Adani Total Gas and GAIL are in deep red. All oil and gas stocks are bleeding on Monday.

Oil & Gas Stocks Crash Today:

Nifty Oil & Gas dropped by 278.90 points or 2.5% to trade at 10,914.50, which is near its day's low of 10,893.55.

Talking about the market fall, Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments said, "With the failure of US-Iran peace talks and Trump's declaration of US naval blockade in the Strait of Hormuz, uncertainty and along with it crude price have spiked. Brent at $103 is emerging as yet another threat to the economy and markets."

He added, "How this naval blockade, which in effect will be a US blockade of Iran's blockade, will play out remains to be seen. There can be dramatic developments on the geopolitical front and consequently on markets also. The ideal strategy in this ultra-uncertain situation is to wait and watch."

Reliance Industries Share Price:

At the time of writing, Reliance share price plunged by 2.64% to trade at Rs 1,314.60 apiece on NSE. RIL is the largest stock of India in terms of market cap.

ONGC, OIL India Share Price:

ONGC and its subsidiary Oil India plunged by nearly 2% and 1% to trade around Rs 281.50 apiece and Rs 468.00 apiece respectively.

OMC Stocks Crash:

Among the top OMC stocks are Indian Oil, BPCL and HPCL. The worst performing stock of the index is HPCL with over 4.4% decline to trade around Rs 344.65 apiece. Meanwhile, BPCL has dropped by 4.08% to trade around Rs 287.15 apiece and IOCL has dipped by over 2.9% to trade around Rs 138.80 apiece.

Natural Gas Stocks Fall Today:

GAIL India plunged by 1.5%, Adani Total Gas was down by over 1.72%, while Petronet LNG and Chennai Petroleum Corporation dropped by 2.4% and 4.20%. Indraprastha Gas and Mahanagar Gas are down by 1.6% and 2.9% respectively.

Other Oil & Gas Stocks:

AEGIS Logistics is down by 2.75%, followed by Castrol India and GSPL who have dived by 1% to 2%.

Why Oil & Gas Stocks Are Falling Today?

1. US-Iran Peace Talks Fail

The talks in Islamabad between US and Iran with Pakistan being the mediator, became an utter failure. Both Iranian officials and US Vice President JD Vance have stated that their significant differences remain. Vance said, "We haven't seen that yet. We hope that we will."

US needs IRAN's commitment to never develop a nuclear weapon.

Further, US announced that, effective immediately, the US navy ships will prevent ships that are using the Strait of Hormuz while accusing Iran for extorting them. US President Donald Trump stated that US will implement a blockade of all maritime traffic from Iran ports with effect from 10 am of April 14. Vessels will be allowed from non-Iranian ports. The latest move is to stop Iran from selling any oil and gas through their ports, which would impact the Islamic regime gravely.

2. Crude Oil Prices Rally:

US WTI Crude Oil Futures jumped by 9.3% to trade around $105 per barrel on Monday, recovering losses from last week. Meanwhile, Brent Crude jumped by 8% to trade around $103 per barrel.

3. Windfall Tax On Diesel, ATF

During the weekend, the government hiked windfall tax on diesel by more than double to Rs 55.5 per litre, from earlier Rs 21.5 per litre.

However, windfall tax on petrol is kept at Zero. But windfall tax on ATF was also increased to Rs 42 per litre from earlier Rs 29.5 per litre.