HPCL vs BPCL, IOCL vs ONGC: Which OMC stock to buy as $110/bbl crude oil price becomes a new nornal? Experts' views
HPCL vs BPCL, IOCL vs ONGC: Amid crude oil prices sustaining at elevated levels and $110/bbl becoming the new normal for the most-traded commodity on the MCX, stock investors are advised to devise their strategy and zero in on oil stocks that will be less affected by the change in the normal crude oil price due to the prolonged US-Iran war and closure of the Strait of Hormuz.
According to stock market investors, stock investors need to shift focus from oil marketing companies to oil exploration companies, because Oil Exploration and Production (E&P) companies are getting the benefit of the rise in the crude oil and diesel oil price gap in the international market due to the disruption in crude oil supply post-US-Iran war.
Decoding the new crude oil price normal and its impact on the oil companies in India, Seema Srivastava, Senior Research Analyst at SMC Global Securities, said, “Crude oil prices have been sustaining at elevated levels, and there seems to be no solution to the Strait of Hormuz disruption. In such a scenario, $110 per barrel has become the new normal for international crude oil prices, and investors need to devise their investment plans keeping this factor in mind until there is an end to the US-Iran war and a solution to the Strait of Hormuz re-opening.”
Highlighting the investment plan regarding oil stocks in the wake of the new normal of crude oil prices, Avinash Gorakshkar, Founder of Avinash Mentor Research, said, “One should shift focus from oil marketing companies to oil exploration companies (E&P), as they are reaping the benefit of rise in the price gap between the crude oil price and diesel prices in the international market after the outbreak of the US-Iran war.”
Gorakshkar said that the crude oil price was at $70 per barrel when the US-Iran war began, and the diesel price was at $108 per barrel. Now, the diesel price is oscillating around $200 per barrel, and the crude oil price is oscillating around $115 per barrel. So, the gap between the crude oil price and the diesel price has widened from $36 per barrel to $85 per barrel, and this is the catch.
“The widening gap between the crude oil price and the diesel oil price is enabling the E&P companies to pare the losses incurred due to the rise in the input cost, with $110 per barrel becoming a new normal for crude oil prices,” said Gorakshkar, adding, “One should look at adding OnGC shares in one's portfolio as it would be least affected by the crude oil price rise, because a rise in crude oil prices leads to higher income from diesel exports for these E&P companies.”
Gorakshkar said Reliance Industries shares can also be a good option for someone looking at oil stocks amid thesoaring Sensex and Nifty 50 indices.
Decoding the technical chart of ONGC shares, Sumeet Bagadia, Executive Director at Choice Broking, said, "ONGC shares have strong support at ₹220. Fresh investors and existing shareholders are advised to hold the scrip, maintaining a strict stop-loss at ₹220 for the upside targets of ₹240 and ₹250 in the near term.”
Asit Manohar has nearly two decades of experience in the mainstream media. In this period, he has served esteemed media organisations like NDTV Profit, The Economic Times, and Zee Business. He has been working at LiveMint Digital since April 2021. During these two decades of journey in mainstream media, Asit has mainly covered external affairs, markets and personal finance. However, his earliest beats include railways, SME, MSME, and politics (Congress beat). Some of his features on political, economic, and foreign policy are documented in the parliamentary records. <br><br> While pursuing his MA (Mass Communication, Session 2004-06), Asit began his media career as a stringer at All India Radio in Varanasi. At AIR Varanasi, Asit worked with the Gyanvani, Yuvvani and Vividh Bharti teams. After working for nearly one year at AIR Varanasi, he shifted to print journalism and started working as a stringer for the HT Media Ltd, Varanasi. At HT Media Ltd in Varanasi, he covered the BHU beat. <br><br> Asit has also worked with some brokerage houses. He has worked with Religare Broking and India Infoline, where he assisted the research team in developing and executing trade strategies for intraday cash, F&O, and commodities. <br><br> Asit is a Gold Medalist in MA (Mass Communication) from BHU, Varanasi. He did his BSc. (Hons) in Mathematics from Magadh University, Bodh Gaya. Asit was a National Talent Scholarship holder during his senior secondary studies (1988-91).
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HomeMarketsStock MarketsHPCL vs BPCL, IOCL vs ONGC: Which OMC stock to buy as $110/bbl crude oil price becomes a new nornal? Experts' views
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