How every $1 rise in crude oil prices boosts ONGC and Oil India revenues?

Synopsis: Rising crude prices, up nearly 12-week highs around $66 a barrel, have fueled a sharp rally with stocks gaining 6–10% in just three sessions. Volumes surged 3–4× the 20-day average, indicating strong institutional confidence amid geopolitical uncertainty.

Strong Rally Continues

ONGC and Oil India shares have been on an impressive run lately. Both companies saw their stocks jump over 4% in a single trading session, extending what was already a three-day winning streak. Oil India’s shares had climbed 10.3% over those three sessions, while ONGC gained 6.1% during the same period. This momentum reflects growing investor confidence in these oil exploration giants.

Global Oil Prices on the Rise

The recent surge in these stocks isn’t happening in isolation. Global crude oil prices have climbed to their highest point in 12 weeks, with Brent Crude now hovering around $66 per barrel. The driving forces behind this price increase are geopolitical tensions, particularly protests in Iran and the possibility of US intervention in the region. It’s worth noting that just last month, oil prices had fallen to multi-year lows amid hopes that the Russia-Ukraine conflict might ease.

The Direct Revenue Impact

Here’s where the numbers get interesting for investors. For every $1 increase in crude oil prices per barrel, ONGC and Oil India stand to gain between ₹300 crore to ₹400 crore in additional revenues. This direct correlation makes these companies highly sensitive to global oil price movements. As exploration and production companies, they sell crude oil at international market prices, so when prices rise, their revenues automatically increase without any additional production costs.

Strong Trading Volumes Signal Confidence

On Wednesday, Oil & Natural Gas Corporation witnessed strong accumulation as volumes surged to about 33 million shares, nearly 3.3× its 20-day average of ~10 million. Such a sharp pickup in participation reflects institutional interest and confirms bullish momentum, often seen at the start of a potential trending move.

On the other hand, Oil India Limited saw heavy buying interest as volumes jumped to around 12.4 million shares, nearly 4.4× the 20-day average of ~2.8 million. Such a sharp surge in participation signals strong institutional activity and confirms the ongoing bullish momentum.

What This Means for Investors

The combination of rising global crude prices and strong delivery-based volumes paints a positive picture for these oil stocks. As domestic oil producers, ONGC and Oil India are natural beneficiaries of higher crude prices. Unlike oil marketing companies that face margin pressure when crude rises, these exploration companies enjoy improved profitability.

With geopolitical uncertainties continuing to support oil prices and both companies showing strong operational fundamentals, the current rally appears to have solid backing. However, investors should remain mindful that oil prices are notoriously volatile and can swing based on global events beyond anyone’s control.

Rising crude prices, improving earnings sensitivity, and strong delivery-led volumes underline the structural strength of Oil & Natural Gas Corporation and Oil India Limited. While near-term momentum looks well supported, investors should balance optimism with caution, as global oil prices remain highly sensitive to geopolitical and macroeconomic shifts.

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