Oil and gas stocks are under the spotlight as trading unfolds this Monday, with Brent crude oil prices hovering around $60 per barrel and U.S. WTI crude prices dipping below that threshold. This decline is set to impact Indian firms involved in crude oil refining and petroleum product manufacturing.

Crude Oil Price Drop: Economic Implications

The recent downturn in crude oil prices is attributed to the reciprocal tariffs imposed by former U.S. President Donald Trump on trade partners, which are anticipated to dampen oil demand and may persist for an extended period. This move has sparked a global trade conflict, raising fears of an impending recession across various economies.

• The International Monetary Fund (IMF) chief, Kristalina Georgieva, voiced concerns about the tariffs threatening global economic stability.
• She stated, “We are evaluating the broader economic effects of the recently announced tariffs, which pose a significant risk to the global outlook during a period of slow growth.”
• Georgieva urged the U.S. and its trade partners to engage constructively to alleviate trade tensions and minimize uncertainty.

Indian Oil & Gas Companies in Focus

Prominent Indian oil and gas firms such as Reliance Industries, ONGC, Oil India, Indian Oil Corporation, and Bharat Petroleum are likely to remain in the limelight today.

• In the previous trading session, Reliance Industries shares plummeted by 3.5%.
• ONGC saw a drop of over 7%, while Oil India fell by 6.8%.
• Shares of Bharat Petroleum declined by 2.3%, among others.

The Nifty Oil & Gas index, which tracks a selection of oil and gas stocks, experienced a decline of 3.78% in the last session and has dropped nearly 4% over the past week. However, this index has shown a modest gain of 3.5% over the last month but has fallen by 5.5% in the preceding three months.

Market Dynamics: Supply vs. Demand

Adding to the downward pressure on prices, the OPEC+ alliance has unexpectedly decided to increase output significantly—ramping up to 411,000 barrels per day from May, compared to the previously planned 135,000 barrels. This surge in supply, coupled with fears of weakening global demand due to trade disruptions, continues to exert a heavy influence on crude oil prices.

• Rahul Kalantri, Vice President of Commodities at Mehta Equities, noted the market’s volatile nature, stating, “The combination of increasing supply and concerns regarding global demand is likely to keep crude oil prices unstable throughout today’s trading session.”

Investors and analysts will be keeping a close eye on further developments in this sector as the implications of these changes unfold.