Oil marketing companies (OMCs) witnessed sharp volatility on Monday, April 7, as a steep fall in global crude oil prices and a fresh hike in export duties rattled investor sentiment.

The Nifty Oil & Gas index opened deep in the red, tracking a nearly 4% drop in Brent crude to $62.51 per barrel—its lowest since April 2021—amid mounting trade tensions between the United States and China.

The selling pressure was exacerbated after the government raised the Special Additional Excise Duty (SAED) on petrol and diesel by ₹2 per litre each

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With this revision, the SAED on petrol now stands at ₹13 and diesel at ₹10. The hike, effective April 8, will not affect domestic pump prices.

Also Read: Cooking gas price increased by ₹50 per cylinder, says Oil minister Hardeep Singh Puri

Initially, stocks of exploration and production companies, including ONGC and Oil India, slumped by up to 6%. Major OMCs like Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum also saw heavy selling. However, as Brent crude dipped further towards $60 per barrel, the shares recovered sharply from the day’s lows on hopes of lower input costs.

Later in the day, as the excise hike came into focus, several oil-linked stocks gave up intraday gains.

The #ExciseDuty increase of Rs. 2 per litre on #petrol and #diesel by Central Government will not be passed on to the consumers.

On one hand, this will insulate the customers from the price hike while on the other hand, the collected amount may be utilised towards under-recovery…

— Indian Oil Corp Ltd (@IndianOilcl) April 7, 2025

Also read: India hikes excise duty by ₹2 each on petrol and diesel; No change in retail prices

The Ministry of Petroleum and Natural Gas clarified that the hike would not be passed on to consumers and domestic retail prices would remain unchanged. Still, OMCs are expected to bear the impact in the short term.

In a follow-up press conference, Petroleum Minister Hardeep Singh Puri reiterated that consumer prices will remain unaffected. “Let me clarify upfront and on the record — this will not be passed on to the consumer,” he said. He noted that while global crude has dipped to around $60, OMCs are holding inventory priced at an average of $75, typically over a 45-day cycle.

“If crude stabilises in the vicinity of $60–$65, OMCs will have the headroom to look at price,” Puri added. He also confirmed that the ₹2 SAED hike is partly aimed at compensating the OMCs for mounting under-recoveries on LPG.

The hike is expected to generate ₹33,000 crore in revenue, while a simultaneous ₹50 per cylinder increase in domestic LPG prices is likely to fetch another ₹5,000–₹7,000 crore.

Public sector OMCs are carrying under-recoveries of over ₹41,000 crore for FY25 due to rising global prices and pending subsidy dues.

Crude’s fall has been swift and steep—down nearly $10 per barrel in a week—fuelled by trade war concerns. Last Friday, oil plunged 7% after China imposed higher tariffs on American goods. Though oil isn’t directly targeted, the move has stoked fears of a global economic slowdown, likely weighing on demand for petroleum products in the months ahead.