Oil refining and retailing stocks were all losing gas in early trades as war fears are threatening to send oil prices spiraling, enhancing the possibility of lower bottom lines.

Major oil retailers and refiners - BPCL (down 1.31% to Rs 207), HPCL (down 0.97% to Rs 280.70), Indian Oil (down 0.68% to Rs 227.50), Bongaigaon Refinery (down 2.76% to Rs14.10) and MRPL (down 1.16% to Rs 8.50) - were all big losers on Monday.

The overwhelming threat of war struck off Rs 1,989.56 crore (Rs 19.89 billion) or 5.27% from the market capitalisation of seven oil refining companies to Rs 35,748.67 crore (Rs 357.48 billion) from Rs 37,738.23 crore (Rs 377.38 billion) last week.

The market fears that in case of a war, global crude oil prices may gallop, hitting profit margins of oil refiners adversely. Already crude oil prices as per Nymex crude futures breached the $36 per barrel mark, at $36.62 per barrel, up $1.25 per barrel from Friday's close of $35.38.

India has already started storing oil as war between the US and Iraq looks inevitable. It is feared that war may disrupt supplies from other producers in the Middle East, which pump about 40% of globally-traded oil.

Indian oil refiners import 70% of their crude oil (at international prices) requirements, but are not in a position to pass on the surge in prices to the end-user due to government-laid constraints. A rise in crude oil prices, will therefore, impact their earnings.

Meanwhile, for the third quarter ended 31 December 2003, the refinery sector, comprising eight companies, registered an 85% rise in net profit to Rs 1,278.78 crore (Rs 12.78 billion) on a 20.33% increase in net sales to Rs 65,009.15 crore (Rs 650.09 billion).

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