The beginning of the week was positive for oil and energy companies in the Indian stock market, where buying was seen in these stocks amid geopolitical movements. Especially the ongoing developments in Venezuela, the major oil producing country of South America, have also affected the sentiment of the domestic market.
Let us tell you that on Monday, the shares of Reliance Industries Limited rose by about 1 percent to reach a new 52-week high of Rs 1,611.20. Apart from this, strength was also seen in government oil companies. Hindustan Petroleum led the gains and touched Rs 508.45, up 1.85 per cent intra-day. ONGC was seen trading 1.16 per cent higher at Rs 246.80, while Indian Oil Corporation gained 1.03 per cent and Oil India gained around 0.5 per cent.
It is noteworthy that this rise has come at a time when crude oil prices have remained almost stable in the international market and there are concerns about supply surplus at the global level. Despite this, investors remained focused on uncertainties related to Venezuela, where the recent US military action that ousted President Nicolas Maduro and his wife has raised new questions about the oil industry.
According to available information, US President Donald Trump has spoken of maintaining control in Venezuela until the transfer of power, which has intensified speculation about the future of its oil assets and international partners. Its direct impact is also believed to be on ONGC, because its foreign unit ONGC Videsh Limited has stake in two projects in Venezuela.
According to brokerage firm Jefferies, ONGC may get a chance to recover the outstanding dividend of about $ 500 million from its San Cristobal field in Venezuela. This amount was till now stuck due to American sanctions. Analysts believe that if restrictions are eased and control regimes change, the company may get additional cash flow from this investment.
Additionally, ONGC also has a stake in the Carabobo field in the Orinoco belt, where capital expenditure plans were on hold till now. These schemes can be started again when the situation improves. At the same time, Oil India is also in the eyes of investors, because it has stake in Venezuelan projects through its associate companies.
There is also discussion about Reliance Industries, because in the past years the company had purchased crude oil from Venezuela, however, due to the US tariff policy, these imports may be put to a halt further. Indian Oil Corporation was also in focus due to its foreign investment units.
Meanwhile, in the international market, Brent crude was seen trading with a slight rise at around $ 60.87 per barrel. The market seems to be trying to strike a balance between the two factors, the decision by OPEC Plus not to change production and the US intervention in Venezuela, and investors are waiting for further signals.
