Shares of Oil India Ltd and Oil and Natural Gas Corporation (ONGC) witnessed slight gains on June 5 as global crude prices strengthened following Saudi Arabia’s latest announcement of reducing crude oil production starting in July. This move by the OPEC nation is expected to bolster crude prices further.
After the announcement, Brent crude surged by 1.23 percent, reaching $77.07 per barrel, while West Texas Oil also climbed 1.23 percent, reaching $72.61 per barrel.
During morning trading on the National Stock Exchange (NSE), Oil India’s shares rose by 2 percent to Rs 255, while ONGC’s shares increased by 0.26 percent, reaching Rs 155.
Higher crude prices bode well for oil producers like Oil India and ONGC as they directly contribute to increased revenues. Analysts estimate that for every $1 rise in crude prices, these companies can expect a 2-4 percent increase in earnings per share.
This isn’t the first time Saudi Arabia has taken steps to curb crude oil production. In April, the nation reduced output by 500,000 barrels per day. Moreover, several OPEC members including Iraq, UAE, Kuwait, and Oman collectively reduced production by 1.16 million barrels per day in April. These measures were implemented to stabilize crude oil prices following a significant drop in March, primarily attributed to concerns over the US banking crisis, according to OPEC statements.
Also Read: Byju’s Approves Aakash IPO: Set for Mid-2024 Release
In October, OPEC had already decreased crude oil production by 2 million barrels per day. With the latest cut, the total reduction in production now stands at 4.5 million barrels per day.
Overall, the announcement of Saudi Arabia’s further cut in crude oil production has had a positive impact on the shares of Oil India and ONGC, reflecting the potential for increased profitability in the wake of strengthened crude prices.
About Oil India:
Oil India Limited is a government-owned central public sector company that falls under the purview of the Ministry of Petroleum and Natural Gas, part of the Government of India. The company’s operations are supervised by the Ministry of Petroleum and Natural Gas, and its main office is located in Duliajan, Assam.
About ONGC:
The Oil and Natural Gas Corporation Limited (ONGC) is a central public sector company in India, owned by the Ministry of Petroleum and Natural Gas, which is part of the Government of India. The company’s headquarters is located in New Delhi. ONGC was established on August 14, 1956, by the Indian Government.
For more of the Latest News, Click Here
