Oil at $110: Why ONGC is Soaring While Reliance and OMCs Face a Multi-Billion Dollar Squeeze

Global energy markets entered a high-shock corridor on Friday as Brent crude jumped to $109.03. This triggered a decoupling within Corporate India. While upstream state-run giants are hitting multi-year valuation highs, a widening gap is threatening the balance sheets of oil retailers and the margins of complex refiners.

With the Strait of Hormuz, the transit point for over half of India's LPG and 20% of global oil, facing prolonged disruption, the geopolitical risk premium has hit its 2026 peak.

Winners vs. Losers

• Upstream Surge (ONGC/Oil India): Pure-play explorers remain the only natural hedge. ONGC shares hit a 52-week high of ₹281.10 this week. Analysts at Jefferies indicate that every $1/bbl rise in crude adds approximately ₹6,100 crore to ONGC’s annual EBITDA. Oil India has similarly outperformed, with year-to-date returns of 12% against a 6% decline in the broader Nifty Oil & Gas index.
• The Refining Squeeze (Reliance Industries): Reliance (RIL) saw its stock decline nearly 4.6% in late March. Morgan Stanley notes that the premium on Heavy-Sour crude, the grade most impacted by the Hormuz blockade, is erasing the traditional complexity advantage of RIL’s Jamnagar facility.
• OMC "Under-Recovery" Crisis: The most severe impact is at the pump. According to the Ministry of Petroleum and Natural Gas, Indian Oil Marketing Companies (OMCs) like IOCL and BPCL are now incurring massive losses. As of April 2, under-recoveries have ballooned to ₹24 per litre on petrol and a staggering ₹104 per litre on diesel.

The $120 Scenario

While BMI (Fitch Solutions) warns that an extended conflict will entail a longer post-war recovery, StoneX and JP Morgan are tracking a "Bullish Tail Risk" scenario. If the Hormuz blockade remains absolute, WTI could break above $115, targeting a structural shift toward $135–$150.

For India, with the 10-year bond yield surging to 6.9% and the Rupee facing depreciation pressure, the energy divide is fast becoming a broader fiscal challenge for the 2026-27 financial year.

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