Oil marketing companies (OMCs) have benefited from a prolonged phase of benign crude prices, a tailwind that has propelled their stocks by as much as 65% over the past year. However, the tide appears to be turning. Since the start of 2026, crude prices have climbed nearly 30%, with escalating Iran–Israel/US tensions raising the risk of supply disruptions. A sustained spike in oil could squeeze refining margins and dent profitability for OMCs. Does this warrant a sell-on-rise strategy in these stocks? Here’s what investors can consider to protect their gains.

OMC stock price performance

IOC shares rallied 65% over a one year period prior to the start of the war on Saturday, February 27 while BPCL shares surged 62% in the same period. While state-run Hindustan Petroleum Corporation (HPCL) shares lag both the PSU stocks, its returns are still at an impressive 50%, a significant outperformance over the sectoral benchmark Nifty Oil & Gas (22%).

As the war enters its sixth day today, BPCL shares have corrected 6% in past two trading sessions while IOC and HPCL have plunged 9% and 10%, respectively.

What’s at stake?

Commodity and currency expert Anuj Gupta said Brent has surged nearly 30% on the year-to-date basis.

The Brent crude prices breached $82 a barrel mark on Wednesday, their highest level since January 2025.

A spike in crude oil prices reduces the refining margins of OMCs, impacting their profitability.Analysts estimates suggest a $150 per barrel target for Brent if a truces is not reached between Iran, Israel and the US. The 21-mile-wide waterway, which remains a critical passage for global supply, allows passage to approximately 13 million barrels per day, accounting for roughly 31% of all seaborne crude oil on earth.

Brokerages including DBS Bank have warned Brent could surge to $150 a barrel in a worst-case scenario, raising fears of inflation, which economies contained with a lot of difficulty over several years following the Covid outbreak.

The ever-deepening crisis has already forced OPEC’s second-largest producer, Iraq, to slash output by nearly 1.5 million barrels a day—about half its production—with officials warning the country may have to shut its entire 3 million bpd capacity within days if exports don’t resume.

Also read: Nykaa shares’ 64% rally crowns it as internet leader, but do rich valuations justify the risk-reward?

Refining margins

BPCL posted an 89% year-on-year increase in consolidated net profit for the December quarter at Rs 7,188 crore, compared with Rs 3,806 crore in the corresponding period last year. Revenue from operations stood at Rs 1.36 lakh crore, marking a 7% increase.

The company’s operating performance was supported by an improvement in refining margins with average Gross Refining Margin (GRM) of $9.68 per barrel for the nine months ended December 31, 2025, compared with $5.95 per barrel in the corresponding April–December period of 2024.

HPCL’s bottom line grew 58% YoY in Q3 at Rs 4,011 crore while topline rose 5% to Rs 1.24 lakh crore. The 9MFY26 GRM stood at $ 6.91 per barrel up from $4.73 per barrel in 9MFY25.

IOC reported a sharp rebound in earnings for the December quarter, with profit after tax surging more than four-fold on a YoY basis, aided by stronger refining margins and better operating performance. The state-run oil marketing major posted a profit after tax of Rs 12,126 crore in Q3FY26, compared with Rs 2,874 crore in the same quarter last year, marking a YoY growth of around 322%.

Revenue from operations rose 7% YoY to Rs 2.31 lakh crore in the December quarter, up from Rs 2.16 lakh crore in Q3FY25. The average GRM for the period April-December 2025 stood at $8.41 per bbl versus $3.69 per bbl in the year ago period.

What should investors do?

The Israel-Iran situation is a big negative for the OMCs and its is still not clear when the war will end so investors should monitor the developments before making a move, Kranthi Bathini, Director-Equity Strategy at WealthMills Securities said. After a strong rally, the advice to them is to book profits and they should use every rise to book gains, he added.

Nilesh Jain, Vice President – Head of Technical and Derivative Research at Centrum Finverse echoes a similar sentiment, recommending investors take profits and sit on sidelines. “We expect crude to move higher and that will have a negative impact on OMC stocks, positionally,” he said.

Also read: Holi-to-Holi multibaggers: From market favourites to hidden gems, 80 stocks deliver up to 1,822% returns

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)