Brent crude and US West Texas Intermediate crude (WTI) traded above $90 and $85 per barrel, respectively in Asian trade on Friday. This price surge followed unconfirmed reports of explosions in Iran, Syria, and Iraq, igniting concerns about a potential escalation of the Middle East crisis.
As crude oil prices are rising, some stocks will benefit from it. According to StockEdge data, here is a list of counters that will benefit from rising crude oil prices:
1. ONGC
2. Indraprastha Gas
3. Oil India
4. Petronet LNG
5. Engineers India
The profitability of these companies is highly correlated to international crude prices. ONGC, for example, has a significant presence in ONGC Videsh Ltd, which contributes significantly to the overall production. The company is highly sensitive to the WTI Crude price movement, and a rise in crude prices has a positive impact on its profitability due to higher realizations from its revenues.
Indraprastha Gas (IGL) is a leading city gas distribution player. The higher crude oil prices for a sustained period would lead to a shift towards compressed natural gas (CNG) as it is an economical and cleaner alternative fuel.
Oil India Ltd. (OIL) is engaged in the business of exploration, development and production of crude oil and natural gas, transportation of crude oil, and production of LPG. The earnings of the company improve when the crude prices increase, thereby improving its margins.
LNG prices move in line with crude oil prices, albeit with a time lag. This helps Petronet LNG improve its realizations and operating profits. The rise in crude oil prices also increases the sales of liquefied natural gas.
Engineers India provides engineering consultancy and EPC services. The company has capabilities to plan and execute long-distance cross-country and submarine pipelines for the transportation of crude oil, petroleum products, two-phase fluids, and slurries including pumping and compressor stations and metering and regulating stations.
Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times.
