Indian Oil Stocks Surge on Falling Crude Prices Amid US-Iran Peace Talks

Shares of Hindustan Petroleum Corporation Limited (HPCL), Indian Oil Corporation (IOC), and Bharat Petroleum Corporation Limited (BPCL) traded higher on Monday after crude oil prices hit a two-week low amid signs of progress in US-Iran peace talks.

IOC shares rose 4% to their day's high of Rs 145, while HPCL surged 6% to Rs 412.55 on the BSE. BPCL advanced over 4.5% to hit an intraday high of Rs 309 per share.

Sentiment was also supported by another increase in fuel prices. Petrol and diesel prices were hiked on Monday, May 25, 2026, marking the fourth increase in less than two weeks.

Petrol prices rose by Rs 2.61 per litre, while diesel prices increased by Rs 2.71 per litre, as state-owned fuel retailers continued passing on higher international oil costs to consumers.

On Saturday, US President Donald Trump said Washington and Tehran had “largely negotiated” a memorandum of understanding on a peace deal that would reopen the Strait of Hormuz, a route that handled nearly one-fifth of global oil and liquefied natural gas shipments before the conflict began.

Brent crude futures dropped $4.71, or 4.55%, to $98.83 a barrel, while U.S. West Texas Intermediate crude declined $4.57, or 4.73%, to $92.03 a barrel. Earlier in the session, both benchmarks touched their weakest levels since May 7.

Last week, U.S. crude prices slumped more than 8%, while Brent lost over 5%, after Trump said he had cancelled imminent airstrikes against Iran to allow more time for diplomacy. Despite the recent pullback, oil prices are still up more than 30% since the U.S. and Israel launched attacks on Iran on Feb. 28.

“The negotiations are proceeding in an orderly and constructive manner, and I have informed my representatives not to rush into a deal when that time is on our side,” Trump said in a social media post on Sunday.

Downstream or oil marketing stocks usually come under pressure when oil prices rise, as their input costs increase sharply while their ability to pass these costs on remains limited. These companies buy crude at higher prices, refine it, and sell the end products, but pricing is often regulated, restricting full cost pass-through to consumers. As a result, margins get squeezed when product prices do not rise in line with crude.

What are experts saying?

Even if a deal is reached, analysts believe it could take several months for oil shipments through the strait to fully normalise and for damaged energy infrastructure to be repaired.

Earlier this month, Saudi Aramco CEO Amin Nasser warned that disruptions in Hormuz could delay stability in global oil markets until 2027, with nearly 100 million barrels of oil supply per week potentially impacted. Saudi Aramco is the world’s largest oil producer.

Meanwhile, Morgan Stanley said the oil market was in “a race against time,” cautioning that the factors preventing crude prices from rising further may weaken if the Strait of Hormuz remains shut through June.

The brokerage added that higher U.S. crude exports and softer demand from China have so far helped prevent a deeper supply shock. However, it warned that an extended closure of Hormuz could tighten global supplies again if disruptions continue beyond what the U.S. and China can comfortably absorb.

Iran has effectively enforced a blockade in the Strait of Hormuz since early March, requiring ships to obtain clearance before passing through the route or risk being targeted. The restrictions were imposed after U.S. and Israeli strikes killed Iran’s Supreme Leader Ayatollah Ali Khamenei, along with several senior leaders.

The Strait of Hormuz remains one of the world’s most critical oil chokepoints, with roughly 20% of global oil supply moving through the passage before the war. Iran’s blockade has sharply reduced crude exports from the Middle East, leading to what has been described as the largest supply disruption in history.