Crude oil prices surged following US airstrikes on Iran’s nuclear facilities over the weekend, dragging down shares of downstream oil marketing companies (OMCs) in Monday’s trade (June 23). Adding to supply fears, Iran’s parliament approved a proposal to close the Strait of Hormuz — a crucial maritime route that facilitates nearly 20% of global oil and LNG shipments. Crude on the Boil Oil prices climbed on the Multi Commodity Exchange (MCX) on Monday after the US backed Israel in targeted military operations against Iranian nuclear sites, intensifying geopolitical tension in the Middle East. The heightened risk of supply disruption — particularly from the potential closure of the Strait of Hormuz — is driving the rally. MCX crude oil futures for the July contract opened at Rs 6,475 per barrel, up from the previous close of Rs 6,404. Prices surged 2.28% to an intraday high of Rs 6,550 and were last trading 1.80% higher at Rs 6,519 per barrel. In international markets, Brent crude futures jumped to their highest level since January. Brent gained $1.88, or 2.44%, to $78.89 a barrel (as of 11:22 GMT), while U.S. West Texas Intermediate (WTI) rose $1.87, or 2.53%, to $75.71, according to Reuters. Since the conflict flared up on June 13, Brent has gained 13%, and WTI has climbed approximately 10%. Crude Oil Price Impact on OMCs and Upstream Producers Rising crude prices typically weigh on OMCs as input costs rise, and companies may not be able to fully pass these on to consumers due to pricing controls or demand pressures, denting their margins. Conversely, oil exploration firms like ONGC and Oil India benefit from higher crude prices. Their earnings per barrel increase while production costs remain relatively stable, leading to improved profitability and positive investor sentiment. As of 9:20 am on Monday, HPCL shares were down 0.7% at Rs 389.70, BPCL declined 0.7% to Rs 311.45, and Indian Oil slipped 0.6% to Rs 137.76. Meanwhile, upstream firms outperformed. ONGC rose 0.6% to Rs 253.35, while Oil India gained 0.5% to Rs 466.95. Brokerages Stay Divided on Oil Stocks Emkay Global stated that as long as Brent crude averages $75/bbl, there is no risk to its earnings forecasts for HPCL, BPCL, and IOCL. It sees upside potential for OMCs from stable earnings, a drop in global LPG prices, and ongoing LPG subsidy payments. On the other hand, JM Financial maintained a ‘Buy’ rating on ONGC and Oil India, noting they are key beneficiaries of higher crude. At current prices, the market seems to be discounting crude at $65/bbl — every $1/bbl increase could lift their EPS by 1.5–2%, the brokerage said. However, JM Financial retained a ‘Sell’ on HPCL and IOCL, and a ‘Hold’ on BPCL, citing concerns around aggressive capital expenditure and stretched valuations, 10–30% above historical averages. “We expect OMCs’ integrated refining-cum-marketing margins to normalise to historical levels — either due to persistently high crude or the government absorbing any decline via excise hikes or retail price cuts,” it added.