India's upstream oil and gas producers could benefit from higher crude prices, with the West Asia conflict and persistent supply disruptions keeping energy markets volatile. Against this backdrop, Kotak Institutional Equities has raised its FY27 crude oil price assumption to $100 per barrel from $90per barrel, while retaining its FY28 and long-term forecasts at $75 per barrel.
Dated Brent crude has averaged $126 per barrel so far in October and $104 per barrel to date in FY27, according to the brokerage. Although oil flows through the Strait of Hormuz have recovered significantly, renewed attacks on Saudi infrastructure and oil tankers have heightened concerns over potential supply disruptions. Crude and product tanker rates have also climbed to multi-year highs.
The brokerage believes the policy environment for domestic upstream companies has improved following amendments to the Oilfields (Regulation and Development) Act, royalty reforms and the government's Samudra Manthan initiative. It also highlighted the favourable pricing framework for gas from new wells, linked to 12% of Brent crude prices.
ONGC remains the brokerage's preferred pick in the upstream oil and gas space, supported by a stronger medium-term production outlook, improving gas realisations and attractive valuations.
Despite earlier setbacks at its KG-DWN-98/2 asset, ONGC's outlook is improving, with higher realisations from new-well gas and production growth from new fields expected to support performance. Its technical service partnership with BP for the Western Offshore asset, which accounts for around 70% of its production, is also expected to strengthen the medium-term outlook.