Oil Prices Surge Amid US-Iran Conflict Boosting ONGC, Oil India Shares
Oil prices surged more than 3% on Tuesday after US forces struck Iranian rocket launchers near the Strait of Hormuz, reigniting fears that renewed tensions could disrupt crude shipments through the critical waterway. ONGC and Oil India shares moved higher by 2% each in an otherwise weak market, driven by the increase in oil prices.
The conflict between the US and Iran has raised concerns about supply disruptions from the world's key crude-producing region. The US strikes on Iranian targets and Tehran's retaliatory attacks have heightened tensions, with President Trump threatening further action against Kharg Island.
As a result of the increased oil prices, ONGC gained 2% at ₹235.95 on the BSE, while Oil India rose 2.3% to ₹492.95. The BSE Sensex was down 0.16% at 76,834 at 01:58 PM.
Analysts view ONGC as a solid dividend play (4-5%) and maintain a 'BUY' rating on the company with an unchanged target price of ₹300 based on its FY28E onwards Brent crude price assumption of $70/bbl. The brokerage firm does not see a risk of windfall tax, citing the government's seriousness about incentivising global oil & gas majors to boost domestic exploration.