ONGC has advanced in three of the last five trading sessions, while Oil India has gained in two of the last five.
Crude oil prices initially jumped as much as 13% at the open, before trimming gains to around 8% and slipping back below the $80 per barrel mark.
Higher crude prices typically benefit upstream producers such as ONGC and Oil India, as every $1 per barrel increase in oil prices is estimated to boost their annual revenue by ₹300 crore to ₹400 crore.
Oil marketing companies may see retail margins come under pressure due to elevated input costs. City gas distribution players such as IGL, MGL and Gujarat Gas could also face margin compression as higher gas input costs weigh on profitability.
Higher oil prices positive for upstream cos
Brokerage firm JPMorgan said higher oil prices are positive for upstream companies such as ONGC but negative for oil marketing companies including BPCL, IOCL and HPCL.
The brokerage added that stronger diesel cracks would benefit Reliance and standalone Indian refining companies.
A spike in natural gas prices could hurt margins for city gas distribution companies such as Mahanagar Gas, Indraprastha Gas and Gujarat Gas, while increasing the attractiveness of GAIL’s Henry Hub-linked purchase contracts, according to JPMorgan.
The key question for investors, the brokerage said, is whether to chase the current price spike by increasing oil exposure.
JPMorgan said that if the ongoing Iran conflict turns out to be short-lived, similar to the episode in June 2025, medium-term investors could use near-term volatility to accumulate oil marketing companies on corrections and consider booking profits in upstream names such as ONGC.
Iran-US-Israel war
The US-Israel strikes on Iran have intensified tensions across the Middle East, with Iran reportedly retaliating through missile and drone attacks targeting parts of the Gulf region, 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% of the group’s total output.
The country produces 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.
There were also conflicting reports about the potential closure of the Strait of Hormuz, a crucial maritime route that handles about 20% of global oil supply and a similar share of LNG shipments.
However, Iran’s foreign minister Abbas Aragachi told Al-Jazeera that there was no intention to shut the strait. Nearly 90% of Iran’s oil exports to China pass through this route.
Analysts, including those at Barclays, said a prolonged disruption in the Strait of Hormuz could push crude prices towards $100 per barrel. However, they cautioned that prices may not sustain those levels if geopolitical tensions ease.
At their monthly meeting on Sunday, OPEC+ members agreed 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.
On Friday, shares of Oil India settled 2.56% higher at ₹485.55, while ONGC ended 0.36% lower at ₹279.10.
