Upstream PSU oil majors weak on bearish forecasts, supply disruption

Even with oil slipping down to $70, this year has seen low swings in oil prices.

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26 Aug, 2025 12:21

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Shares of upstream oil stocks ONGC and OIL continue to reel under selling pressure on September 10, weighed down by weakness in global demand, supply disruptions, and bearish notes revising forecast for crude oil prices downwards.

Oil India was trading down close to 3 percent in the final hours of trade, with a 15 percent cut over last five sessions. Shares of ONGC were lower by a percent, and down over five percent in last five trading sessions.

Monday's session had seen a rebound in global crude prices that have been down for six sessions on the trot, before that.

Global Oil Prices

The head of oil at Trafigura Group — a leading trader in the commodity — Ben Luckock has said that he sees Brent prices slipping into the $60-70 range 'relatively soon', adding to the selloff in the commodity prices.

A slew of brokerages have been bearish on their outlook for crude prices, with Morgan Stanley cutting their Brent price forecast from $80 down to $75 citing concerns over demand outlook. A weak Chinese economy and worries of a slowing, if not recessionary US economy too added to its list of factors that compelled the downward price revision.

Bank of America has revised its H2CY24 price outlook on crude oil to $75 from the previous projection of $90 per barrel, while Goldman Sachs has lowered price target from crude oil to $80. UBS too is targetting crude oil price at $80 as it worries over shortage of supply.

Production Disruption

Adding to the sentimental pressure is a tropical Storm - Francine - that has gathered momentum in the Gulf of Mexico, forcing drillers to evacuate crew. This is being projected as a Category 2 hurricane, expected to hit Louisiana, USA, and disrupting output at nine major platforms in its likely path.

“Eyes have been on the risks of supplies disruption with Tropical Storm Francine, but apart from that, there just has not been much conviction for dip-buying,” Bloomberg News quoted Yeap Jun Rong, a market strategist for IG Asia.

Downgrade Pressure

All these has added to an already uncertain market for crude oil. A Citi note on September 9 had lowered its rating on ONGC to Neutral, with a target price of Rs 330 per share, adding that crude prices staying sustainably below $75 would impact earnings. The Citi note lowered EPS forecast for FY25 by 7 percent and added that they do not see valuation comfort for ONGC anymore.