Oil and gas shares rose on Tuesday, 19 May, following indications of reduced tensions between the US and Iran, which lifted optimism for stability in global crude supply and a decrease in oil prices.
Investor confidence particularly strengthened for downstream oil marketing firms, as falling crude prices are expected to lower raw material costs and boost refining and marketing margins.
Shares of Indian Oil Corporation, Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL), Gujarat Gas, Indraprastha Gas, Adani Total Gas rose nearly 4% amidst hopes of better profitability should crude prices keep declining.
Oil prices declined after US President Donald Trump said he had called off a planned military strike on Iran following appeals from key Persian Gulf allies.
Brent crude slipped below $110 per barrel after rising 2.6% in the previous session, while US benchmark West Texas Intermediate (WTI) crude for July delivery traded below $103 a barrel.
In a social media post, Trump said leaders from Saudi Arabia, Qatar and the United Arab Emirates had urged him to “hold off” on the planned strike against Iran, which was reportedly scheduled for Tuesday, as “serious negotiations are now taking place.”
Crude oil prices have risen sharply in recent days amid concerns that rising tensions and the near-complete shutdown of the Strait of Hormuz could significantly disrupt energy supplies from the Persian Gulf.
Nevertheless, uncertainty continues to be high, as Trump has made previous threats of military intervention against Iran without taking further action, and Tehran has not yet officially announced the restart of talks.
