Shares of three upstream PSU oil and gas firms dropped 4.45% to 8.68% at 12:25 IST on BSE on worries of higher subsidy burden.
Oil India lost 4.45% to Rs 423.25 after hitting a 52-week low of Rs 423.05 in intraday trade today, 28 August 2013.
GAIL (India) slumped 6.11% to Rs 275.15 after hitting a 52-week low of Rs 273 in intraday trade today, 28 August 2013.
ONGC dropped 8.68% to Rs 236.75 after hitting a 52-week low of Rs 235.60 in intraday trade today, 28 August 2013.
Three state-run upstream oil firms -- Oil India, ONGC and GAIL (India) -- share part of the under-recoveries of state-run oil refining-cum-market firms arising from the government-imposed price caps on three key fuels -- diesel, LPG for domestic use and kerosene sold through the public distribution system.
US crude oil futures extended Tuesday's steep gains on worries that a potential military strike against Syria could disrupt the region's oil supplies. US crude oil futures for October delivery jumped 2.65%, to $111.66 a barrel in electronic trading today, 28 August 2013. US crude oil futures for October delivery had surged 2.9%, to $109.01 a barrel on Tuesday. Higher crude oil prices could increase under-recoveries of PSU OMCs. PSU OMCs suffer under recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol.
The weakness in rupee also raised concerns about increased costs of importing oil. PSU OMCs import about 70-75% of their crude oil needs and rely heavily on foreign currency borrowings, which largely remain unhedged.
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The rupee hit a record low below 68 against the dollar. The partially convertible rupee was trading at 68.42 against the dollar, sharply lower than its close of 66.24/25 on Tuesday, 27 August 2013.
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