Oil and Gas Stocks Fall 2-4% as Crude Hits $111 on Fresh US-Iran War Escalation: Reliance, BPCL, Adani Total Gas, MGL in Red

Oil and gas stocks across the NSE and BSE came under significant selling pressure on 18 May 2026 as Brent crude surged above $111 per barrel following fresh escalation in the US-Iran conflict. The Nifty Oil and Gas index declined over 1.5 percent, with Mahanagar Gas leading the oil and gas stocks decline at 4.5 percent and IOCL, BPCL, Adani Total Gas, HPCL, ONGC, Reliance Industries and Petronet LNG all falling between 1.5 and 4 percent.

The trigger for today’s oil and gas stocks selloff is President Trump’s rejection of Iran’s latest letter, which revived fears that the Strait of Hormuz could remain disrupted for an extended period. Brent crude’s surge to $111.50 from $107 in the previous week has delivered a body blow to downstream oil and gas stocks in India, which face direct earnings damage from rising crude input costs and under-recoveries.

Oil and Gas Stocks Performance on 18 May 2026

• Nifty Oil and Gas Index: Down over 1.5%, falling 184+ points to 11,414 levels
• Mahanagar Gas (MGL): Down 4.5% — steepest decline among oil and gas stocks
• IOCL (Indian Oil Corporation): Down over 2%
• BPCL: Down over 2%
• Adani Total Gas: Down over 2%
• HPCL: Down over 2%
• Petronet LNG: Down over 2%
• Chennai Petroleum: Down over 2%
• GAIL: Down over 2%
• Reliance Industries: Down up to 2%
• Gujarat State Petronet: Down up to 2%
• Aegis Logistics: Down up to 2%
• Castrol India: Down up to 2%
• ONGC: Down up to 2%

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Why Are Oil and Gas Stocks Falling Today

Trump Rejected Iran’s Letter: Hormuz Fears Return

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, explained the driver precisely: the expected resolution of the West Asia crisis slipped away after President Trump rejected Iran’s letter. Brent crude spiked back to $111 as a result, aggravating India’s current account deficit. The Strait of Hormuz, through which approximately 20 percent of global daily oil supply transits, faces renewed disruption risk with the diplomatic track having broken down.

Downstream OMC Oil and Gas Stocks: Under-Recovery Crisis

For OMC oil and gas stocks including IOCL, BPCL and HPCL, the crude spike to $111.50 means under-recoveries have now reached Rs 17 to Rs 18 per litre on petrol and diesel even after the Rs 3 per litre hike on 15 May and prior excise cuts of Rs 10 per litre. Emkay Global estimates quarterly OMC losses at Rs 57,000 to Rs 58,000 crore at current crude levels. The Rs 3 per litre hike on 15 May was below analyst expectations of Rs 5 to Rs 6, leaving a significant under-recovery gap. Oil Minister Puri confirmed OMCs are absorbing approximately Rs 1,000 crore per day in losses.

City Gas Distribution Oil and Gas Stocks: Input Cost Spiral

City gas distribution oil and gas stocks including MGL, IGL, Adani Total Gas and Gujarat Gas are being hit by rising LNG and gas input costs. As crude rises, Brent-linked gas contracts — which supply a portion of city gas distribution networks — become more expensive. Analysts at Equirus Capital expect CGD oil and gas stocks to see sharp EBITDA margin compression in Q4 FY26, with Gujarat Gas most affected due to higher exposure to spot LNG. MGL and IGL are relatively better placed due to Henry Hub-linked gas sourcing.

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Reliance Industries: Refining Margins Under Pressure

Reliance Industries, India’s largest private sector company, is an oil and gas stocks participant through its refining and petrochemicals operations. Higher crude costs compress gross refining margins when product crack spreads do not widen proportionally. While Reliance’s Jio and Retail businesses provide earnings diversification, the refining segment faces direct headwinds from $111 crude. RIL stock fell up to 2 percent alongside other oil and gas stocks on 18 May.

PM Modi’s Austerity Call: Sector Sentiment Impact

Vijayakumar also noted that PM Modi’s recent appeal to the nation to curb consumption of petrol, diesel, gold, chemical fertilisers and edible oil has slightly negative implications for economic growth in FY27. Industries related to this austerity call — petroleum, chemical fertilisers, gold, air travel and hospitality — will face sentimental pressure. This macro narrative adds a layer of cautious selling to oil and gas stocks even beyond the direct crude cost headwinds.

Which Oil and Gas Stocks Are Better Positioned

Not all oil and gas stocks face equal headwinds. Upstream producers like ONGC and Oil India benefit from higher crude prices as their revenue is linked to the crude price benchmark. However, both also have downstream subsidiaries and government-mandated sales constraints that limit the full benefit.

Among city gas distribution oil and gas stocks, MGL and IGL are better positioned than Gujarat Gas due to Henry Hub-linked sourcing that hedges against crude-linked gas costs. Petronet LNG benefits from higher LNG processing volumes as gas demand remains elevated.

Pharma sector stocks, as noted by Vijayakumar, are completely unaffected by the crude crisis and continue to show sector leadership, with Gland Pharma surging 16 percent on 18 May on strong Q4 FY26 results.

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Conclusion

Oil and gas stocks fell 2 to 4.5 percent on 18 May 2026 as Brent crude surged to $111.50 on fresh US-Iran conflict escalation after Trump rejected Iran’s diplomatic letter. Mahanagar Gas led the oil and gas stocks decline at 4.5 percent, followed by IOCL, BPCL, Adani Total Gas, HPCL and Petronet LNG. The under-recovery crisis at Rs 17-18 per litre even after the recent fuel hike continues to compress OMC profitability. Track live prices for all oil and gas stocks and the Nifty Oil and Gas index on Univest. Consult a SEBI-registered advisor before investing.

Disclaimer: Investment in the share market is subject to risk. This article is for informational and educational purposes only and does not constitute investment advice. Verify all numbers before investing. Consult a SEBI-registered advisor before making investment decisions.

FAQs

Why are oil and gas stocks falling today?

Ans. Oil and gas stocks are falling because Brent crude surged above $111.50 on fresh US-Iran conflict escalation after Trump rejected Iran’s letter. Higher crude directly increases input costs for OMC oil and gas stocks (IOCL, BPCL, HPCL) and raises gas procurement costs for CGD oil and gas stocks (MGL, IGL, Adani Total Gas). The Nifty Oil and Gas index fell over 1.5 percent.

Which oil and gas stocks fell the most on 18 May 2026?

Ans. Mahanagar Gas fell approximately 4.5 percent, the steepest decline among oil and gas stocks on 18 May. IOCL, BPCL, Adani Total Gas, HPCL, GAIL, Petronet LNG and Chennai Petroleum all fell over 2 percent. Reliance Industries, ONGC, Aegis Logistics and Castrol India also declined up to 2 percent.

Are any oil and gas stocks benefiting from higher crude?

Ans. Upstream oil and gas stocks ONGC and Oil India benefit from higher crude oil prices as their revenue is crude-linked. However, government pricing constraints limit the full benefit. Among CGD oil and gas stocks, MGL and IGL are relatively better placed than Gujarat Gas due to Henry Hub-linked gas sourcing that provides some cost insulation.