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Oil and gas stocks plunge after Saudi drone attacks; HPCL, BPCL down over 4% each

Oil and gas stocks plunge after Saudi drone attacks; HPCL, BPCL down over 4% each

Oil and gas stocks plunge after Saudi drone attacks; HPCL, BPCL down over 4% each
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By Pranati Deva  Sept 16, 2019 9:50:04 AM IST (Published)

Shares of oil and gas companies were under pressure on Monday after crude oil prices surged over 10 percent following drone attacks in Saudi Arabian oil fields over the weekend, which effectively shut down 6 percent of the global oil supply.

Shares of oil and gas companies were under pressure on Monday after crude oil prices surged over 10 percent following drone attacks in Saudi Arabian oil fields over the weekend, which effectively shut down 6 percent of the global oil supply.

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Among stocks, oil marketing companies plunged with HPCL down 5 percent, while BPCL and IOC fell 4.5 percent and 3 percent, respectively in morning deals. Reliance Industries also declined in morning trade, down over 2 percent. However, ONGC and GAIL rose 3 percent and 1 percent respectively. In comparison, the BSE Sensex was trading 0.6 percent or 220 points lower at 37,164.
The world energy market was affected after drone attacks on Saturday destroyed parts of Saudi Aramco’s Abqaiq plant — one of the world’s largest processors of oil — and a separate nearby oil field, which slashed output by the world's oil top producer by half.
The Iran-backed Houthi group in Yemen had claimed responsibility for the attack but a senior US official told reporters on Sunday that evidence indicated Iran was behind it.
US President Donald Trump also blamed Iran for the attack, raising the possibility of a military strike on the country.
Trump said Sunday the US was "locked and loaded" to respond to the attack, while secretary of state Mike Pompeo said: "The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression."
Tehran denies the accusations but the news has revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.
According to Jefferies, drone attacks on key Saudi oil infrastructure have taken over 5 percent of global oil. In India, ONGC and Oil India will benefit but the OMCs may suffer, it added. The brokerage continues to like IOC, Petronet LNG, and GAIL.
Meanwhile, Credit Suisse said that even before Saudi’s supply disruption, global oil markets were poised for a tighter second half of 2019. They believe improved fundamentals should trigger re-rating as expectations are low.
Brent soared almost 20 percent at one point on Monday, while WTI surged around 15 percent before paring the gains.
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