Shares of major Indian oil companies, including Chennai Petroleum Corporation Ltd (CPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL), and Oil India Ltd, experienced significant gains in Wednesday's trading session. This market surge comes as global Brent crude oil prices edged closer to the $100 per barrel mark, primarily driven by escalating geopolitical tensions in West Asia.
CPCL shares recorded an impressive 5.10 percent increase, reaching a new record high of Rs 1,531.45. MRPL stock also saw a substantial rise of 3.84 percent, hitting a day's high of Rs 179.70. Meanwhile, Oil India shares advanced 1.73 percent to Rs 503.70. Other energy-related companies like Antelopus Selan Energy Ltd, Hindustan Oil Exploration Company Ltd (HOEC), and Oil and Natural Gas Corporation Ltd (ONGC) also traded higher, with some experiencing gains of up to 10 percent in early deals.
West Asia Conflict Fuels Oil Price Rally
The upward trajectory in crude oil prices has continued for the fourth consecutive session. Brent crude futures jumped $1.57 to $99.49 a barrel, marking their highest point since late June. US West Texas Intermediate (WTI) crude futures also climbed, rising $1.60 to $94.63 a barrel.
This rally is directly linked to an intensification of conflict in West Asia. Recent events include Iranian-backed Houthis in Yemen launching strikes on Saudi cities, US forces targeting Iranian oil tankers, and Iran striking a US base in Jordan. The Strait of Hormuz, a critical waterway for global oil and liquefied natural gas supplies, also saw slowed shipping traffic earlier in the week following threats of retaliation from Iran against potential new US attacks. Before the conflict began in late February, this strait handled approximately one-fifth of the world's daily oil and LNG shipments.
Analyst Outlook on Oil Sector Stocks
According to Choice Institutional Equities, while higher crude prices typically present a challenge for oil marketing companies (OMCs), firms like CPCL and MRPL are poised to benefit from the current market conditions. The brokerage has set a target price of Rs 215 per share for MRPL, suggesting further upside potential from its current level. For CPCL, Choice Institutional Equities projected a target price of Rs 1,540 per share.