Oil Marketing Companies under pressure
Published On: Thursday, February 24, 2022 | By: Team KnowMyStock
Shares of oil marketing companies (OMC) and city gas distribution players (CGDs) are under pressure, falling up to 6 percent on the BSE in Thursday’s intra-day trade as oil prices topped the $100 a barrel-mark for the first time since 2014 after Russia ordered military operations in Ukraine and reports emerged of blasts in some major Ukrainian cities. Rising crude oil prices are considered a major challenge for India Inc. because any hike in raw material and energy prices may put further pressure on the margins of domestic companies going ahead. Unsurprisingly, following escalating geopolitical tensions, the Indian stock markets nosedived. Following the rise in crude oil prices, the cost of aviation turbine fuel (ATF) has advanced 19 percent to Rs 90,519 per kl from Rs 76,062 per kl on January 1. The rise in ATF prices may hit the balance sheet of airline companies which accounts for more than 35 percent of the cost of running an airline in India.
Higher oil prices are bad news for the Indiann economy as it imports a lion’s share of its fuel requirements. “We expect crude oil prices to remain volatile and rise from current levels if geopolitical concerns do not materially ease," from Kotak Institutional Equities on 23 February.
Tags: OMC Crudeoil Russia-ukraine war
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