Shares of oil marketing and processing companies dropped on Monday with state-run BPCL emerging as the biggest loser among Nifty 50 stocks following a nearly 8 percent jump in oil prices due to a surprise production cut announced by the oil cartel OPEC+.

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Oil prices surged as much as 8 percent early Monday morning, with Brent Crude making a high of $86.44 after Saudi Arabia and OPEC+ announced a surprise cut in production of around 1.16 million barrels per day.

Higher crude oil prices hurts marketing margins of OMCs and also hits their gross refining margin (GRMs) in the long run.

Rising crude prices are also not good for the Indian, which meets the lion's share of its oil requirement through imports. Tanvee Gupta Jain, the chief India economist at UBS Securities, had told CNBC-TV18, that every $10 rise in oil prices, leads to a rise of 0.05 percent in the current account deficit.

Shares of BPCL are the top losers on the Nifty 50 index, trading with losses of nearly 2.9 percent. HPCL shares are also trading with cuts of 2 percent, although they are off the day's low. However, shares of Indian Oil have recovered all their losses and are trading flat.

On the other hand, shares of oil exploration companies gained in Monday's session. Hindustan Oil Exploration Company surged 7.4 percent, Oil India Ltd. shares rose by 5.3 percent, while those of ONGC gained 4 percent in morning trade on Monday.

(Edited by : Rukmani Krishna)

First Published:Apr 3, 2023 11:28 AM IST