Oil and gas shares mixed: BPCL sinks 3.5%, Indraprastha Gas down 4%, ONGC top gainer amid supply disruption concerns

Oil prices jumped more than $2 today on supply disruption worries after Moscow ordered troops into two breakaway regions in eastern Ukraine.

Commonwealth Bank analyst Vivek Dhar, cited by news agency Reuters, said it was unlikely US and European governments would impose oil or gas sanctions on Russia if it invaded Ukraine further as that would inflict pain on themselves.

However, Russia, the second-largest oil producer, and exporter in the world, itself could hold back oil and gas supplies if it sought to retaliate against any other sanctions imposed by the West, Dhar added.

Bharat Petroleum Corporation Limited (BPCL), the top loser in the oil and gas pack at the time of writing, slipped 3.5 percent from its previous close to an intraday low of Rs 355.80. In the past five days, BPCL stock has erased almost 5 percent of investors’ wealth as against the benchmark index Nifty which has given up 2.5 percent during the period.

Indraprastha Gas Limited (IGL) stock was down 4.4 percent in intraday trade to Rs 354.10. The stock, which has given up more than 6 percent in the past five days, was trading 2.47 percent lower at Rs 361.40 on the National Stock Exchange at the time of writing.

Shares of state-run GAIL (India) too witnessed a sell-off of 3 percent in intraday trade. The stock was trading 1.76 percent lower at Rs 133.90 on NSE at 12:50 pm. It has corrected more than 4 percent in the past five days when the Russia-Ukraine crisis took centre stage.

Indian Oil Corporation stock slipped 2 percent to an intraday low of Rs 116.50. It was trading 1.72 percent lower at Rs 117.15 at the time of writing. It has erased 3.5 percent of investors’ wealth in the last five trading sessions.

However, ONGC shares jumped 1.9 percent today an intraday high of Rs 166.50. The stock limited the upside in afternoon deals and was trading only 0.18 percent higher at Rs 163.70on NSE at the time of writing. In the 5-day period, the stock has declined almost a percent.

Probal Sen, an analyst at ICICI Securities, told CNBC-TV18 that ONGC will benefit when if crude and gas prices continue to spike.

“Given the kind of crisis we are facing, it is very difficult to put a number on how high crude can go. Also, if you add the fact that domestic gas prices are also likely to rise very sharply from April, then to that extent ONGC will benefit. However, we do not have official coverage as of now but directionally ONGC will be a big beneficiary if crude and gas prices continue to spike,” he said.

According to Jahangir Aziz, Head of Emerging Markets Economics Research & Commodities, JPMorgan said, in the absence of any untoward geopolitical events, the demand and supply dynamics suggest oil should average on $90 a barrel.

“However, in the event, if we do get a geopolitical shock, then oil will easily go above $100 and we are looking at even if there isn't a full-fledged invasion like situation,” he told CNBC-TV18.

Independent energy and carbon market strategist Miswin Mahesh is of the view that going forward demand is likely to be impacted not just by the oil price but general inflation and rate rising environment etc.

“Overall, I see the market balancing at USD 85 per barrel level even though we see geopolitical premium and option market-linked flow activity that we think is pushing oil towards USD 100 per barrel,” he said.