Upstream oil firms fall as low crude oil prices stoke margin worries
ONGC fell 3.55%, GAIL India shed 4.63%, Cairn India slipped 3.53% and Oil India declined 3.42%
Mumbai: Shares of upstream oil and gas companies extended their losses on Friday as investors feared that fall in international crude oil prices will affect revenues and margins of these companies.
Shares of Oil and Natural Gas Corp. Ltd (ONGC) fell 3.55% to ₹ 336.95, GAIL India Ltd shed 4.63% to ₹ 423.20, Cairn India Ltd slipped 3.53% to ₹ 242.05 and Oil India Ltd declined 3.42% to ₹ 547.15.
Every $1 per barrel drop in crude price trims ONGC’s annual net revenue by roughly ₹ 800 crore and net profit by ₹ 450-475 crore and if crude price continues to fall, it could get worse, Mint reported in November, quoting A.K. Banerjee, director of finance at ONGC.
Earlier, Brent and West Texas Intermediate (WTI) were trading near the lowest prices since July 2009 as Saudi Arabia questioned the need to cut output, bolstering speculation that the Organization of the Petroleum Exporting Countries’ (Opec’s) biggest producer will defend market share.
Since 1 November, ONGC has fallen 16.81%, GAIL India lost 20.02%, Cairn India lost 15.1% and Oil India dropped 14.01%.
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