ONGC Shares Rise as Oil Fears Hit After US–Israel Strikes

The share price of the largest government-owned oil and gas explorer and producer in India is surging after the US and Israel attacked Iran during the weekend.

The value of Oil and Natural Gas Corporation Ltd (ONGC) hit a high of ₹293.00 early on Monday, up by 4.75% from the previous close of ₹279.70. At time of writing, the stock is changing hands for ₹280.30, up by 0.21%.

The stock rallied as crude prices increased by as much as 12% after the strikes in Iran damaged tankers and disrupted oil shipments.

Global Energy Superpower

Iran is a major global energy player, holding around 13% of global oil reserves, according to the latest data from the Organization of the Petroleum Exporting Countries (OPEC).

The nation also exercises significant control over the Strait of Hormuz, one of the world’s most important oil chokepoints. Following the attacks, the Iranian Revolutionary Guard Corps (IRGC) closed the waterway threatening global oil supplies and causing price surges.

Implications on India

Bloomberg reported that state refiners and government officials in India met over the weekend to make contingency plans as the strikes in Iran impacted oil shipments passing through the Strait of Hormuz. Around half of India’s total oil imports pass through this narrow waterway from countries such as Iraq, Saudi Arabia, the UAE and Kuwait. 

According to the financial services group JM Financial, the implications of the crisis are particularly significant for India, the world’s third-largest oil importer, given that for every $1 increase in crude prices increases could raise the country’s annual import bill by about $2 billion.

“Upstream energy and defence may see relative support, while oil-sensitive sectors such as OMCs, paints, tyres, aviation and chemicals could face margin pressure. Crude remains the key macro variable for Indian equities under the current escalation scenario,” the brokerage said, according to a report from News18.