ONGC, Oil India shares rise up to 2.5% as Brent crude holds above $100

The latest market report highlights that Shares of Oil and Natural Gas Corp (ONGC) and Oil India advanced 2% and 2.4%, respectively, aided by elevated crude prices that lift revenues and earnings margins of upstream oil producers.

An intensifying Middle East conflict kept crude prices above the $100 per barrel mark.

Iran stated it attacked 10 ships near the Strait of Hormuz after the US sank five Iranian oil tankers in the largest attacks on shipping in the six-month-old conflict.

Elevated crude prices are detrimental for India, the world's third-largest importer of the commodity, as they gain the import bill, worsen inflationary pressures and weigh on economic expansion and corporate profitability.

Brent crude futures inched softer by 0.1% to $101.10 a barrel by 0256 GMT. US West Texas Intermediate crude was at $96.24 a barrel, up 0.2%.

At 10:25 am on September 10, ONGC shares were trading 1.8% elevated at Rs 238.15 apiece while those of Oil India advanced 2.25% to Rs 510.2 apiece.

"Costlier crude will squeeze margins in oil-sensitive sectors such as aviation, paints, tyres, chemicals, logistics and parts of FMCG," stated Rajeev Sharan, head of research at Brickwork Ratings.

"Dearer oil additionally adds to inflation risk and strengthens the case for the U.S. Fed to sound hawkish, or even hike interest rates on September 16."

"The tit-for-tat attacks suggest oil flows from the Persian Gulf are likely to stay disrupted for the foreseeable future," ANZ market observer Daniel Hynes stated in a client note.

Oil flows through the Strait of Hormuz, the waterway that before the war carried roughly a fifth of global oil and gas supplies, stay far below pre-war marks.

Pressure is mounting on alternative channels for Gulf oil exports, with Iran-aligned Houthi militants stepping up strikes against Saudi Arabia, threatening crude shipments via the Red Sea.

Uncertainty around actual volumes coming from the Strait of Hormuz and continued shipping disruptions are keeping physical markets tight and supporting a geopolitical risk premium in crude prices, OCBC market observer Christopher Wong stated in a note.

In the physical oil market, the dated Brent oil benchmark, against which roughly two-thirds of supply is priced, has been above $100 per barrel since September 3, according to LSEG data.

The U.S. Energy Information Administration on Wednesday boosted its oil price forecasts for this year and next, as global stockpiles dip due to the loss of Middle Eastern supply.