Shares of Oil & Natural Gas Corporation (ONGC) rose as much as 3.4 percent on March 3 as global crude oil prices continued their ascent to hit their highest level in eight years.
Brent crude oil futures soared past the $118-mark and were up nearly 3 percent as the ongoing invasion of Ukraine by Russia showed no signs of easing. The sanctions imposed on the Russian economy by members of the North Atlantic Treaty Organisation have led to concerns of the country’s oil exports being cut-off.
Brokerage firm TD Securities suggested that oil prices could hit $145 per barrel in the coming weeks while Morgan Stanley sees the commodity rising to $125 per barrel due to the ongoing Ukraine crisis.
The surge in oil prices is immensely beneficial for ONGC with analysts expecting a 2 percent jump in valuations of the company for every $1 per barrel rise in crude oil prices. Shares of the company have risen 17 percent so far this year.
Besides oil, ONGC also benefits from the rise in global natural gas prices given that a large share of the company’s revenues are generated through sale of gas. Analysts expect the surge in global natural gas prices to result in a more than doubling of domestic prices when the rates are rejigged in April.
In September, the government had raised natural gas prices by 62 percent for the first time in two years to $2.9 mmBtu tracking the rise in global natural gas prices.
At 09:37 am, shares of ONGC were up 1.6 percent at Rs 165.50 on the National Stock Exchange.
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