Shares of India’s leading oil marketing companies (OMCs) experienced sharp declines today. The sell-off was triggered by mounting supply disruption concerns after the United States imposed new sanctions on two of Russia’s largest energy producers.

The volatility in the Indian market mirrors a sudden spike in international oil benchmarks, where Brent crude futures rallied over 3%, climbing past $64 per barrel. This jump was a direct reaction to the US administration’s decision to sanction Rosneft and Lukoil, major oil giants accused of funding Russia’s military efforts.

The sanctions have forced a critical review across the Indian energy sector, which has become the largest buyer of discounted Russian crude since the start of the conflict in Ukraine in 2022. Reports indicate that Indian refiners, including private sector giants and state-owned players, are now scrambling to scrutinize their existing supply contracts. This review is aimed at ensuring they avoid direct transactions with the newly blacklisted Russian entities, which could expose them to crippling secondary US sanctions.

For India’s OMCs, which primarily operate in a price-sensitive market, higher crude oil prices mean an immediate squeeze on their marketing margins. The surge in their raw material cost, which is passed on slowly or not at all to consumers, directly hits their profitability. This led to stocks like Hindustan Petroleum Corporation Ltd., Bharat Petroleum Corporation Ltd. and Indian Oil Corporation Ltd. falling by up to 4%.