Oil stocks turned green after the OPEC+ grouping's decision to introduce 'deepest cuts' in oil production since the 2020 Covid pandemic to arrest the slide in crude oil prices. The Organisation of Petroleum Exporting Countries and its allies (OPEC+), a grouping of 23 countries, during its meeting on Wednesday, agreed to cut output by 2 million barrels per day to curb falling crude oil prices. The grouping comprises about 13 oil-rich countries led by Saudi Arabia, Middle East countries, African nations and their 10 allies like Russia, which together control nearly 40% of the world's oil supply.
The 45th meeting of the Joint Ministerial Monitoring Committee (JMMC) and the 33rd OPEC and the non-OPEC ministerial meeting took place in Vienna, Austria, on Wednesday. An official statement said the decision to cut output has been taken in light of the uncertainty surrounding the global economy and oil market outlooks.
Following the OPEC+ decision to cut output, crude oil prices rose to nearly a three-week high, with Brent crude futures for December at $93.29 per barrel by 0656 GMT. U.S. West Texas Intermediate (WTI) crude futures for November delivery also surged to $87.61 per barrel after rising 1.4% during the previous session. Notably, index Brent crude prices had risen from a low of $20.4 per barrel in April 2020 to peak at $123 per barrel by March this year, but then steadily fell to $84 by September 26, forcing the OPEC+ members to implement output cuts.
Amid the development, the key oils stocks are trading in positive territory. State-owned oil giant Indian Oil Corporation Ltd (IOC) rose 1.04% to ₹68.10 after a gap-up opening. The stock, however, is trading near its 52-week low of ₹65.20, which it touched on September 29, 2022. The IOC stock is gaining for the past two days and has risen 2.02% in the period.
The stock of India's biggest publically listen company Reliance Industries Ltd surged 0.91% to ₹2,434.75. The stock opened a gap-up at ₹2,428 and rose to its intra-day high of ₹2,447.20 at 11.5 AM. The RIL stock has been gaining for the past two days and has risen 2.6% in the period. Similarly, BPCL stock is also trading 0.29% up at ₹312.35. The Hindustan Petroleum Corporation Ltd (HPCL) stock also rose 1.3% to ₹221.10 after the gap-up opening at ₹219.
In line with its Asian peers, the Indian markets opened in the green today. The benchmark BSE Sensex jumped 0.71% to 58,478.26 today, while Nifty is up 0.72% to 17,397.70. Asian shares are also trading higher today, with MSCI's broadest index of Asia-Pacific shares outside Japan rising 0.4% in early trade and the Refinitiv Asia Energy index up 0.7%. Japan's Nikkei also rose 0.7%, which is its highest since September 2022. Also, S&P 500 futures advanced 0.6% and Nasdaq futures rose 0.9%.
India, the third largest oil importer, is dependent on OPEC and allies for over 70% of its crude requirements. The government had strategically increased cheap oil supplies from Russia, which is now its second-largest import destination after Saudi Arabia. Before the Ukraine war, India was buying only 1% of its crude requirement from Russia, but in the last month, it increased to over 20%, say reports.