Upstream Oil Majors ONGC, Oil India Rally 5% Amid Crude Oil Price Spike

The shares of upstream oil companies ONGC, Oil India rose as much as 5% in trade on Monday, March 2 after crude oil prices surged as much as 12% after attacks in the Middle East region were escalated by Iran-Israel.

While The US-Israel and Iran conflict has increased oil prices, Indian upstream oil marketing companies offer better protection as spike in cost of crude oil translated into higher revenue.

The shares of Oil and Natural Gas Corporation Ltd (ONGC) rose 5% to hit an intra-day high of Rs 293.15 on the BSE, while Oil India rose 4.5% to Rs 505.50 in opening trade on Monday, March 2. 

The $1 per barrel surge in oil prices is estimated to boost their annual revenue by Rs 300 crore to Rs 400 crore.

On the other hand, rising natural gas costs is likely to weigh in on margins of city gas distribution companies such as Mahanagar Gas, Indraprastha Gas and Gujarat Gas.

While Iran's influence might have softened, it still remains the fourth largest oil producer in the world.

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The West Asian nation has produces nearly around 3.3 million barrels per day, roughly 3% of global supply, and operates a refinery with a capacity of 500,000 barrels per day.

Meanwhile, the Israel-US war on Iran, which has entered its third day has already disrupted global shipping, oil refinery linked activities, and the killing of Iranian Supreme Leader Ayatollah Ali Khamenei.

The tensions were rife as soon as Israel launched a daylight strike on Tehran on February 28, targeting key military and strategic sites. Israeli Defence Minister Israel Katz called the attack “pre-emptive,” prompting a state of emergency across the country.

As of 2:44 pm, the shares of ONGC was trading 1.05% higher at Rs 282.85 apiece, while Oil India's shares were 1% higher at Rs 488.50 per share.