Global crude oil markets have witnessed a sharp rally in recent days, putting oil and gas companies firmly in the spotlight of investors and market analysts. The primary driver behind this surge appears to be escalating geopolitical risks, particularly surrounding Iran and the potential for conflict in key regions.
Geopolitical Tensions Fuel Oil Price Rally
Financial markets are actively pricing in the substantial risk that global oil supply could face significant disruption if tensions escalate further. A particular concern is the possibility of Iran threatening to block the strategic Strait of Hormuz, a critical maritime chokepoint through which nearly 20% of the world's crude oil exports flow. This vulnerability in global supply chains has injected considerable volatility and upward pressure on benchmark oil prices.
Three Key Stocks to Monitor
For investors navigating this volatile energy landscape, here are three prominent Indian stocks that warrant close attention as crude oil prices continue their upward trajectory.
Oil and Natural Gas Corporation Ltd (ONGC)
ONGC stands as India's largest domestic crude oil producer. The company typically benefits directly from rising crude oil prices because it sells its production at prices linked to international benchmarks. This creates a favorable scenario where higher crude prices boost ONGC's revenue per barrel, while most of its production and exploration costs remain relatively fixed.
This operating leverage means that even a moderate increase in crude prices can translate into a disproportionately higher rise in the company's earnings and cash flows. Enhanced cash generation strengthens ONGC's ability to fund critical exploration activities, develop new oil fields, and support its overseas investments through ONGC Videsh, which also earns improved returns when global oil prices are elevated.
Recent financial performance underscores this dynamic. In the second quarter of fiscal year 2026, ONGC reported revenues of ₹1,57,911.1 crore, with net profits reaching ₹12,275.0 crore, showing growth from the previous year's ₹9,853.6 crore. The company's crude oil production continues to show sequential growth, with Q2 FY26 production at 4.63 million tonnes. Management has indicated ambitious targets, including achieving 20 million tonnes of crude oil production in FY26 and targeting a significant reduction in operational expenditure.
Hindustan Petroleum Corporation Ltd (HPCL)
HPCL operates across the entire energy value chain, from refining crude oil to marketing finished products like petrol, diesel, LPG, and lubricants across India. The impact of rising crude prices on HPCL is more nuanced. The company often faces short-term pressure on profitability because its raw material costs increase immediately, while the selling prices of key products like petrol and diesel may not rise at the same pace, especially if the government intervenes to control fuel prices and manage inflation.
This situation can squeeze refining and marketing margins and potentially lead to inventory-related losses. However, the company's strategic projects could bolster long-term prospects. HPCL is progressing with major initiatives like the Barmer refinery and petrochemical complex in Rajasthan, along with expansions at its Visakhapatnam and Mumbai facilities.
Financially, HPCL recorded revenues of ₹1,24,582.7 crore in Q3 FY26, with net profits rising to ₹3,890.4 crore from ₹3,008.2 crore in the corresponding period the previous year.
Oil India Ltd
Oil India is a government-owned upstream oil and gas company engaged in exploration, production, and transportation of crude oil and natural gas. As a producer, the company directly benefits from higher crude oil prices through increased realization for the oil it produces and sells.
The company has been working to strengthen its resource base through acreage expansion, exploration in new prospective areas, and achieving planned drilling targets. On the financial front, Oil India reported Q2 FY26 revenues of ₹9,175.4 crore, with net profits at ₹1,440.3 crore.
On the downstream side, the expansion of the Numaligarh Refinery is gaining momentum, with the commissioning of select units proceeding as planned.
Investment Considerations
While rising crude oil prices create opportunities for certain segments of the oil and gas sector, investors should carefully consider the distinct business models and risk profiles of each company. Upstream producers like ONGC and Oil India typically gain more directly from price increases, while integrated players like HPCL face more complex margin dynamics.
Market participants should monitor ongoing geopolitical developments, government policies on fuel pricing, and company-specific operational metrics when evaluating these investment opportunities.
Disclaimer: This analysis is for informational purposes only. It does not constitute investment advice or a stock recommendation. Readers should conduct their own research or consult with financial advisors before making investment decisions.
