Oil prices fell, ONGC-Oil India shares slipped
On Wednesday, shares of upstream oil companies like ONGC, Oil India and Seamec Ltd have seen a decline of about 4%. The main reason for this was the weakness in the prices of crude oil. In fact, there have been reports of some positive progress in the ongoing talks between America and Iran. This has increased the hope that tension between the two countries may reduce. If tensions reduce, the risk of interruption in oil supply from the Middle East will also reduce. Due to this, there was pressure on the prices of crude oil in the international market.
price of brent crude
The price of Brent crude remained around $67 per barrel, while American WTI crude reached around $62 per barrel. Both the prices remained close to the low level of the last two weeks. The fall in crude oil prices is considered negative for upstream companies. Upstream companies produce oil. When oil is cheap, they earn less per barrel. This affects their profits and they can spend less on daily life and production (exploration). At the same time, downstream companies involved in refining and marketing benefit from cheap oil.
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The market is still not completely convinced
Iran’s Foreign Minister Abbas Araghchi said that some guiding principles have been agreed upon in the talks between America and Iran on the nuclear issue, but the final agreement is still far away. On this, experts believe that the market is still not completely confident. According to Sugandha Sachdeva, head of a research firm, oil prices may rise on technical grounds, but it will take time to reach a firm agreement.
pressure on oil prices
According to ET’s report, a political advisory body has feared that there is a 65 percent possibility of America taking military action against Iran by the end of April. Another pressure on oil prices is the news related to Tengiz oil field of Kazakhstan. Production there is increasing again and production can start at full capacity by 23 February. This is expected to increase the supply in the market, which may bring down the prices further.
