ate-owned oil exploration & production companies like Oil and Natural Gas Corporation (ONGC) and Oil India gained 3 per cent on the BSE in Wednesday’s intra-day trade in an otherwise subdued market after oil prices surged. Crude oil prices increased around 6 per cent on Tuesday amid reports of lower supply by oil producers and easing of lockdown curbs in parts of China.

At 10:47 AM, ONGC and Oil India were up 3 per cent at Rs 173.85 and Rs 237.20, respectively, on the back of heavy volumes. In comparison, the S&P BSE Sensex was up 0.04 per cent at 58,597 points. Upstream companies like ONGC and Oil India are expected to witness strong earnings on higher oil prices. Oil prices saw a sharp increase amid concern over supply disruption due to the geopolitical conflict in Europe in the quarter that ended March 2022 (Q4FY22). Brent prices have averaged nearly $100/bbl in Q4FY22 with nearly $30/bbl being added during the quarter end due to the Ukraine war.

Analysts at HDFC Securities expect Brent crude price to remain elevated as Organisation of the Petroleum Exporting Countries (OPEC) supply growth is likely to lag behind global demand due to ongoing geopolitical tensions.

“The average Brent crude price in FY22 stood at USD 80/bbl, up 79 per cent YoY, driven by recovery in global demand with opening up of economies. However, the OPEC supply is lagging behind demand growth due to Russian invasion of Ukraine. Despite the fact that no restrictions were imposed on crude oil import from Russia currently, some off-takers have shunned Russian oil due to uncertainties around insurance, shipping, etc. because of sanctions,” the brokerage firm added.

The US Energy Information Administration (EIA) also estimates that the growth in global crude oil supply will suffer in 2022.