ONGC, Oil India rally 5% as Israel attack on Iran lifts oil prices by 12%. What are experts saying?

Shares of ONGC, Oil India soared as much as 5% on Monday after crude prices surged as much as 12% as Iran and Israel intensified attacks in the Middle East, damaging tankers and disrupting shipments from the key oil-producing region.

ONGC shares rose 5% to their day's high of Rs 293 on the BSE, while Oil India rose 4.5% to Rs 505.50 in the opening trade. A rise in crude prices is a positive development for upstream oil and gas companies (producers like ONGC and Oil India). Higher prices directly increase their revenue per barrel, possibly lifting profit margins, and can lead to increased capital expenditure on exploration.

On Monday, Brent crude futures climbed to $82.37, the highest since January 2025, in the first trading session after the US and Israel carried out strikes on Iran on Saturday, killing its Supreme Leader Ali Khamenei. At 0054 GMT, Brent was trading at $78.24 a barrel, up $5.37, or 7.37%.

U.S. West Texas Intermediate (WTI) crude gained $4.66, or 6.95%, to $71.68 a barrel, after earlier touching $75.33, its highest level since June 2025.

The attacks also put commercial vessels at risk, with missiles striking at least three tankers off the Gulf coast and killing one seafarer, shipping sources and officials told Reuters. Iran said it had shut navigation through the Strait of Hormuz, prompting Asian governments and refiners, key buyers of crude, to review their oil stockpiles.

Where are prices headed?

Domestic brokerage firm JM Financial said Brent crude had already climbed to a seven-month high of around $72.8 per barrel amid fears of strikes. Its scenario analysis indicates that limited retaliation could lift prices by $5–10 per barrel; direct damage to Iranian oil infrastructure may add $10–12 per barrel; disruption in the Strait of Hormuz could push crude above $90 per barrel; and a broader regional war could drive prices beyond $100 per barrel. Nearly 20% of global oil flows pass through the Strait of Hormuz, while over 40% of India’s crude imports transit this route, underscoring significant exposure.

It added that every $1 increase in crude prices raises India’s annual import bill by roughly $2 billion. Prolonged tensions could elevate logistics and marine insurance costs, disrupt Gulf shipping routes and widen pressure on the trade balance. The INR faces a near-term depreciation bias, with potential RBI intervention via foreign exchange reserves. The transmission mechanism is evident: higher crude prices increase inflation risks; elevated inflation pushes bond yields higher; and rising yields compress equity valuation multiples.

If tensions escalate to the point of threatening the Strait of Hormuz, the risk premium could become structural rather than proportional. Even the possibility of partial disruption in this critical chokepoint could add a $20–$40 per barrel geopolitical premium, potentially pushing crude back towards the $95–$110+ range, well beyond the direct mechanical impact of Iran’s supply loss alone, Equirus Securities said in a report.

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