Oil and Gas Stocks Rally as Crude Oil Prices Register Slight Decrease
Oil and Gas Shares Surge on Reduced Tensions Between US and Iran
Oil and gas shares experienced a significant rise on Tuesday, 19 May, following indications of reduced tensions between the US and Iran, which lifted optimism for stability in global crude supply and a decrease in oil prices. Investor confidence strengthened particularly for downstream oil marketing firms, as falling crude prices are expected to lower raw material costs and boost refining and marketing margins.
Shares of major Indian oil companies, including Indian Oil Corporation, Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL), Gujarat Gas, Indraprastha Gas, and Adani Total Gas, rose nearly 4% amidst hopes of better profitability should crude prices continue to decline.
Oil prices declined after US President Donald Trump said he had called off a planned military strike on Iran following appeals from key Persian Gulf allies. Brent crude slipped below $110 per barrel after rising 2.6% in the previous session, while US benchmark West Texas Intermediate (WTI) crude for July delivery traded below $103 a barrel.
In a social media post, Trump said leaders from Saudi Arabia, Qatar, and the United Arab Emirates had urged him to "hold off" on the planned strike against Iran, which was reportedly scheduled for Tuesday, as "serious negotiations are now taking place." Crude oil prices have risen sharply in recent days amid concerns that rising tensions and the near-complete shutdown of the Strait of Hormuz could significantly disrupt energy supplies from the Persian Gulf.
| Company | Previous Session Change | Current Session Change | Overall Change |
|---|---|---|---|
| Indian Oil Corporation | - | 4% | - |
| Bharat Petroleum Corporation (BPCL) | - | 4% | - |
| Hindustan Petroleum Corporation (HPCL) | - | 4% | - |
| Gujarat Gas | - | 4% | - |
| Indraprastha Gas | - | 4% | - |
| Adani Total Gas | - | 4% | - |
Uncertainty continues to be high, as Trump has made previous threats of military intervention against Iran without taking further action, and Tehran has not yet officially announced the restart of talks.
According to Anshul Jain, Head of Research at Lakshmishree, oil marketing companies (OMCs) are beginning to present attractive long-term bottom-fishing opportunities after correcting more than 30% from their all-time highs. He noted that the sector is showing early signs of base formation, with price action stabilising following a prolonged downtrend. Jain highlighted Hindustan Petroleum Corporation as the strongest player in terms of relative price resilience and recovery structure compared to peers, and predicted that sustained strength above recent swing highs could potentially trigger a broader rerating across oil marketing stocks.
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
Investor Takeaway
Investors may consider oil and gas stocks for potential gains due to decreased crude prices.
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