Shares of major Indian oil and energy companies kicked off the trading week on a positive note, defying flat global crude prices, as investors reacted to a dramatic geopolitical shift in the key oil-producing nation of Venezuela.
Market Rally Amid Geopolitical Upheaval
The surge followed the weekend's large-scale US military operation which resulted in the removal of Venezuela's President Nicolas Maduro and his wife. The couple was transported to the United States to face charges including narco-terrorism and drug trafficking. US President Donald Trump's vow to "run the country" until a proper transition of power has injected fresh uncertainty into Venezuela's crucial oil industry and its international partnerships.
On the Bombay Stock Exchange, Reliance Industries Limited (RIL) soared 1% to touch a 52-week high of Rs 1,611.20. Other public sector oil marketing companies also witnessed significant buying interest. Hindustan Petroleum Corporation Ltd (HPCL) led the pack, gaining 1.85% to an intraday high of Rs 508.45. Oil and Natural Gas Corporation (ONGC) advanced 1.16% to Rs 246.80, Indian Oil Corporation (IOC) added 1.03% to Rs 168.79, and Oil India rose 0.47% to Rs 432.45.
ONGC's $500 Million Venezuelan Dividend in Spotlight
Market focus intensified on ONGC due to its direct exposure to Venezuelan assets through its overseas arm, ONGC Videsh. Analysts speculate that a US-led restructuring of Venezuela's oil sector could unlock long-pending cash flows for the Indian explorer. Global brokerage Jefferies, in a note cited by ET, highlighted that ONGC may be close to recovering around US$500 million in unpaid dividends from its Venezuelan upstream investment in the San Cristobal field.
"ONGC has not been paid its share of dividends from production at San Cristobal, totaling more than US$500mn," the brokerage stated. It added that "with the US stepping in, ONGC may stand to recover these unpaid amounts," subject to a potential easing of sanctions and changes in the control and marketing of Venezuelan crude. These dividends have been blocked due to US sanctions on Caracas, forcing ONGC to carry the receivable on its books.
Jefferies also flagged potential upside from ONGC's second Venezuelan asset, the Carabobo field in the Orinoco belt, where it holds an 11% equity stake. Stalled capital expenditure plans there might be revived if operating conditions improve. The brokerage has maintained a 'Buy' rating on ONGC with a target price of Rs 310, implying a 28% upside from its last close of Rs 241.50. It valued ONGC's consolidated operations at 8.2 times its December 2026 forward earnings.
Broader Impact on Indian Oil Companies
The ripple effects of the Venezuela crisis extend to other Indian firms. Oil India is also under scrutiny as its wholly-owned subsidiary, through a chain of holdings, owns a stake in Petrocarabobo SA, the joint venture behind Project Carabobo-1. Reliance Industries, a significant buyer of Venezuelan crude, remains in the spotlight, though it had considered halting such imports after the US announced tariffs last year. Indian Oil Corporation's subsidiary, IOC Sweden AB, also functions as an investment vehicle for E&P projects in Venezuela.
Jefferies cautioned that lower Brent crude prices, lower price realizations, and lower-than-expected production from ONGC's KG 98/2 block are key downside risks. However, the potential $500 million dividend recovery is identified as a medium-term catalyst.
Meanwhile, global crude benchmarks showed limited movement. Brent crude futures edged up a mere 0.2% to $60.87 per barrel as markets balanced the implications of the US intervention in Venezuela against an OPEC+ decision to keep oil output unchanged.
