ONGC and Oil India Shares in Focus as Crude Oil Prices Surge After US Israel Strikes on Iran

ONGC and Oil India Shares in Focus as Crude Oil Prices Surge After US Israel Strikes on Iran​

Shares of Oil & Natural Gas Corporation Ltd. and Oil India Ltd. remain in focus on Monday, March 2, after global crude oil prices surge sharply following weekend attacks by the United States and Israel on Iran, intensifying geopolitical tensions across the Middle East.

Crude prices initially jump as much as 13 percent at the open before trimming gains to around 8 percent and slipping below the 80 dollar per barrel mark, keeping energy stocks and oil-linked counters under close watch.

ONGC and Oil India Track Crude Volatility​

Oil & Natural Gas Corporation Ltd. has advanced in three of the last five trading sessions, while Oil India Ltd. has gained in two of the last five sessions, reflecting investor sensitivity to movements in global oil benchmarks.

Higher crude prices typically benefit upstream producers such as ONGC and Oil India. Every 1 dollar per barrel increase in oil prices is estimated to boost their annual revenue by 300 crore rupees to 400 crore rupees, strengthening earnings outlook when prices rise.

On Friday, shares of Oil India settle 2.56 percent higher at 485.55 rupees, while ONGC ends 0.36 percent lower at 279.10 rupees.

Oil Marketing and City Gas Companies Face Margin Pressure​

While upstream companies stand to gain, elevated crude prices can pressure downstream players.

Oil marketing companies may see retail margins come under strain due to higher input costs. City gas distribution players such as Indraprastha Gas Limited, Mahanagar Gas Limited and Gujarat Gas could also face margin compression as rising gas input costs weigh on profitability.

Middle East Tensions and Iran’s Oil Role​

The US Israel strikes on Iran intensify tensions in the region, with Iran reportedly retaliating through missile and drone attacks targeting parts of the Gulf, including Dubai, Abu Dhabi, Qatar, Bahrain, Saudi Arabia and Oman.

Although Iran’s regional influence may have waned in recent years, it remains the fourth largest producer within the OPEC+ alliance, accounting for about 12 percent of the group’s total output.

Iran produces around 3.3 million barrels per day, roughly 3 percent of global supply, and operates a refinery with a capacity of 500,000 barrels per day.

Strait of Hormuz in Spotlight​

There are conflicting reports about the potential closure of the Strait of Hormuz, a critical maritime route that handles about 20 percent of global oil supply and a similar share of LNG shipments.

Iran’s foreign minister Abbas Aragachi tells Al Jazeera that there is no intention to shut the strait. Nearly 90 percent of Iran’s oil exports to China pass through this route.

Analysts, including those at Barclays, state that a prolonged disruption in the Strait of Hormuz could push crude prices toward 100 dollars per barrel. However, they caution that prices may not sustain those levels if geopolitical tensions ease.

OPEC+ Accelerates Output Hikes from April​

At their monthly meeting on Sunday, OPEC+ members agree to accelerate planned output hikes starting April in response to the evolving situation.

Key producers Saudi Arabia and Russia, which had paused output increases in the first quarter, will add 206,000 barrels per day from April. This increase is 1.5 times higher than the 137,000 barrels per day hike announced in December.

With crude markets reacting sharply to geopolitical developments and supply adjustments, energy stocks including ONGC and Oil India are likely to remain in focus as investors track further price movements and regional developments.