Synopsis: Crude oil surged up to 13% after Middle East tensions escalated, briefly holding near $80 per barrel before cooling. Supply risks around the Strait of Hormuz, which handles 20% of global oil, remain key. Meanwhile, OPEC+ plans to raise output by 206,000 barrels per day from April.
Shares of ONGC and Oil India opened higher after the US and Israel launched strikes on Iran over the weekend. ONGC shares rose nearly 4%, while Oil India climbed around 3%. The reason is simple when crude oil prices go up, companies that dig and produce oil earn more money.
Crude Oil Spikes, Then Pulls Back
Oil prices jumped as much as 13% right when markets opened, which is a massive single-day move. However, buyers cooled down quickly, and prices trimmed back to around an 8% gain before slipping below $80 per barrel. This kind of sharp spike followed by a pullback is common when war fears drive markets, emotions run high, and then logic takes over.
For every $1 rise in crude oil prices, ONGC and Oil India together earn an estimated ₹300 crore to ₹400 crore more in annual revenue. That is a big deal, and it explains why their stocks reacted so fast.
Winners and Losers in the Oil Market
Who gains
Upstream producers like ONGC and Oil India directly benefit because the oil they pump out of the ground is now worth more. Reliance Industries and standalone Indian refiners also benefit from stronger diesel refining margins. GAIL stands to gain because higher gas prices make its cheaper US-linked gas purchase contracts more valuable.
Who loses
Oil marketing companies like BPCL, IOCL, and HPCL face a tough situation. They buy crude at higher prices but cannot always pass the full cost to consumers right away. This squeezes their profit margins. City gas distributors IGL, MGL, and Gujarat Gas also face pressure because the gas they buy as raw material becomes more expensive, hurting their bottom line. Global brokerage JPMorgan confirmed this view, saying higher oil prices are good for upstream companies but bad for oil marketing companies.
The Strait of Hormuz: The World’s Most Important Waterway
At the heart of this crisis lies the Strait of Hormuz, a narrow sea passage through which about 20% of the world’s oil and a similar share of LNG shipments pass every day. If Iran were to block this strait, energy markets would go into panic mode.
Iran is the fourth-largest producer in OPEC+, producing around 3.3 million barrels per day, about 3% of global supply. While Iran’s foreign minister said there are no plans to close the strait, just the fear of it happening is enough to move markets. Analysts at Barclays warned that a prolonged disruption could push crude prices toward $100 per barrel, though they also noted prices may not stay there if tensions ease.
What Should Investors Do?
JPMorgan gave some practical advice. If this conflict turns out to be short-lived, like a similar episode in June 2025, then medium-term investors may want to buy oil marketing companies during dips and consider selling upstream stocks like ONGC near current highs.
Meanwhile, OPEC+ met on Sunday and agreed to speed up output increases starting in April. Saudi Arabia and Russia will together add 206,000 barrels per day, 1.5 times more than what was originally planned. This extra supply could eventually cool prices if geopolitical fears fade.
In conclusion, crude oil’s direction now depends more on geopolitics than fundamentals. If tensions escalate or the Strait of Hormuz faces disruption, prices could test $100, benefiting upstream players. However, if the conflict cools and OPEC+ adds supply, prices may stabilise, shifting opportunities toward oil marketing and refining companies instead.
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