Shares of state-run upstream oil explorers Oil India Ltd. and Oil and Natural Gas Corporation Ltd. (ONGC) declined up to 8% on Friday, April 4, after a sharp fall in crude oil prices overnight.

Both Brent and WTI crude fell nearly 7% on Thursday. While WTI fell towards the $66 per barrel mark, Brent prices fell to $70 per barrel.

This decline in brent crude

was triggered by a surprise, higher-than-expected production hike announcement by the Organization of Petroleum Exporting Countries (OPEC+). While OPEC+ had planned to hike output by 1.38 million barrels per day in May, they announced an increase of 4.11 million barrels per day.

Delegates described the same as a deliberate effort to drive down prices to punish members that were producing more than their quota. Adding to the uncertainties were Donald Trump’s tariff announcements and the rising fears of recession in the US.

Oil prices falling are negative for Oil India and ONGC as it adversely impacts their margin. The price of the products refined by them may not fall as quickly or in proportion to the fall seen in crude oil prices and hence, refineries which have held inventories bought at higher prices may face inventory losses.

Oil India shares declined 8.1% to hit an intraday low of ₹354.6 per share. ONGC shares declined 7.85% to hit an intraday low of ₹224.2 per share.

Oil India and ONGC shares have declined nearly 38% and 24% in the last six months, respectively.

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