Oil on a boil! How will rising crude prices impact ONGC, Oil India earnings? JM Financial explains

Crude oil prices have surged for the second day in a row, with Brent crude approaching $75 per barrel and WTI surpassing $74. This uptick is largely attributed to escalating tensions in the Middle East, which have historically been a catalyst for oil market volatility. As geopolitical uncertainties loom, investors and market analysts are closely monitoring the situation, anticipating potential impacts on global oil supply chains. JM Financial has weighed in on the implications of rising crude prices for major Indian oil companies like ONGC and Oil India. According to their analysis, higher crude prices could bolster the earnings of these companies in the short term, as their revenue is directly tied to oil prices. However, the benefits might be tempered by increased operational costs and potential governmental interventions like price caps or adjusted export duties, which are often employed to stabilize domestic markets. While the current oil price rally presents an immediate financial boost for ONGC and Oil India, the long-term effects remain uncertain. JM Financial suggests that sustained high prices could lead to increased exploration and production activities, yet warns that prolonged geopolitical tensions could disrupt supply chains and affect global demand. As the situation unfolds, stakeholders are urged to remain vigilant and adaptable to swiftly changing market dynamics.

— Authored by Next24 Live