Shares of major OMCs such as Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Petroleum Corporation Ltd. (BPCL), and Indian Oil Corporation Ltd. (IOC) fell by over 2% on 6th September.

The decline was due to the reports that the government is considering reducing fuel prices, as global crude oil prices have dropped to a nine-month low.

Ongoing inter-ministerial discussions are being held, with officials monitoring global economic developments. The recent decline in oil prices has improved the profitability of oil marketing companies (OMCs), which may enable them to provide relief to consumers.

For the week, Brent crude was set to decline nearly 8%, and West Texas Intermediate (WTI) was expected to drop about 6%. This decline comes as investors await U.S. nonfarm payroll data that could impact the Federal Reserve’s interest rate decision for its September 17-18 meeting.

In August, concerns about a U.S. recession led to a global market sell-off, causing oil prices to drop over a dollar, with Brent crude hitting a seven-month low. Prices later recovered due to rising tensions in the Middle East.

On Thursday, Brent crude fell to a more than one-year low as concerns over U.S. and Chinese demand outweighed positive factors like a significant drop in U.S. oil inventories and OPEC+’s decision to delay planned output increases.

OPEC+ has agreed to postpone production increases for October and November and may further pause or reverse these hikes based on market conditions.

The potential reduction in fuel prices is a relief for consumers but has negatively impacted OMC shares, which could face margin pressures if the government proceeds with the cuts.

At 2:48 PM, HPCL was down 3.20% at Rs 434.15, BPCL was down 2.23% at Rs 352.65, and IOC was down 2.79% at Rs 176.28 on NSE.