Following a strong winter storm that interrupted US petroleum output and exports, oil prices are climbing due to supply concerns. Prices are also being supported by growing tensions in the Middle East.
Oil Price Surge Sends ONGC, Oil India Shares Up Nearly 10%
Following the steep increase in oil prices, the shares of state-owned Oil & Natural Gas Corporation (ONGC) and Oil India surged up to 10% in trade on January 28. Following the disruption of US petroleum output and exports due to a strong winter storm, supply concerns have arisen.
Oil prices were also bolstered by escalating tensions in the Middle East. As of 11 a.m., WTI crude futures increased 42 cents to trade at $62.81 a barrel, while Brent crude futures increased 33 cents to $67.90 per barrel.
The Nifty Oil & Gas index was up more than 3 percent at 11,735.55, and the two equities were among the top gainers.
Why is the price of oil going up?
Oil continued to rise as researchers calculated that US producers lost up to 2 million barrels per day, or about 15% of the country’s total output, during the weekend due to the storm’s impact on power grids and energy infrastructure.
According to ship tracking firm Vortexa, exports of crude and LNG from U.S. Gulf Coast ports fell to zero on Sunday, according to Reuters. According to Toshitaka Tazawa, an analyst at Fujitomi Securities, the increase in oil prices is also being driven by a decline in production in Kazakhstan.However, selling pressure is expected to resume once supply concerns subside,” Tazawa continued. He added that geopolitical issues, such as the tensions in the Middle East, might keep WTI trading at about $60 per barrel for the time being due to an anticipated worldwide excess in petroleum production this year.
Oil prices are also being supported by tensions between the US and Iran. According to sources cited by Reuters, a US aircraft carrier and accompanying warships have reached the Middle East. According to a statement from ANZ analysts, this has increased the likelihood that US President Donald Trump will carry out his warning to attack Iran’s senior leadership in retaliation for the country’s deadly crackdown on protestors.
ONGC share price:
The price of ONGC shares increased by over 7% to reach a new 52-week high of Rs 266.2 per share. ONGC stated earlier yesterday that it had signed Ship Building Contracts (SBCs) with Samsung Heavy Industries of South Korea to build two cutting-edge Very Large Ethane Carriers (VLEC).
In GIFT City, Gujarat, ONGC and MOL Japan established two joint venture firms, Bharat Ethane One IFSC Pvt. Ltd. and Bharat Ethane Two IFSC Pvt. Ltd., each of which owns and runs a single VLEC. According to a press statement from the firm, these ships will facilitate the transfer of roughly 600 KTPA of ethane for OPaL, an ONGC affiliate.
It further stated that the VLECs will fly the Indian flag and have a capacity of one lakh cubic meters for cargo.
In the last five days, ONGC shares have increased by almost 9%, and in the last month, they have increased by more than 12%.
Share price of Oil India:
Oil India shares reached a new 52-week high of Rs 492 per share, up almost 10%. Over the last five days, the stock has increased by more than 11%, and over the last month, it has increased by more than 18%.
FAQ: ONGC & Oil India Shares Surge Amid Rising Oil Prices
1. Why are ONGC and Oil India shares rising sharply?
Shares of ONGC and Oil India surged up to 10% on January 28 due to a steep increase in global oil prices. Supply disruptions in the US caused by a strong winter storm, combined with geopolitical tensions in the Middle East, have driven investor optimism and pushed energy stocks higher.
2. What caused the recent rise in oil prices?
Oil prices rose due to several factors:
The US winter storm reduced petroleum output by up to 2 million barrels per day (about 15% of total US production).
Crude and LNG exports from the US Gulf Coast temporarily fell to zero.
Production declines in Kazakhstan.
Escalating geopolitical tensions, particularly between the US and Iran.
3. How much did ONGC shares increase?
ONGC shares jumped over 7% to a 52-week high of Rs 266.2 per share. In the past month, ONGC stock has risen by more than 12%, and by almost 9% over the last five trading days.
4. How much did Oil India shares rise?
Oil India shares reached a new 52-week high of Rs 492 per share, up nearly 10%. Over the past month, the stock has increased more than 18%, and by over 11% in the last five days.
5. What developments are supporting ONGC’s growth?
ONGC recently signed Ship Building Contracts with Samsung Heavy Industries, South Korea, to construct two Very Large Ethane Carriers (VLECs). These ships, owned and operated through joint ventures in GIFT City, Gujarat, will carry roughly 600 KTPA of ethane for OPaL, an ONGC affiliate, under the Indian flag.
6. How is the overall oil & gas sector performing?
The Nifty Oil & Gas index rose over 3% to 11,735.55, with ONGC and Oil India being top gainers. Rising global crude prices and increased investor interest in energy companies are driving this sector-wide rally.
7. Will oil prices continue to rise?
Experts expect oil prices to remain volatile. While geopolitical tensions and temporary supply disruptions have pushed prices up, a potential global surplus in petroleum production could eventually ease the upward pressure. WTI crude is expected to trade around $60 per barrel in the near term.
8. What is the impact of geopolitical tensions on oil prices?
Tensions in the Middle East, including US military deployments and political conflicts with Iran, have heightened uncertainty, which tends to support higher oil prices globally.
9. Are these share price gains temporary?
While short-term volatility is possible due to supply and geopolitical factors, long-term performance may depend on ONGC and Oil India’s ongoing projects, global oil demand, and international market conditions.
10. Why should investors follow ONGC and Oil India now?
With new infrastructure projects like VLECs, strong operational performance, and favorable oil price trends, ONGC and Oil India are positioned to benefit from both domestic and global energy market developments.
