The blockade of the Strait of Hormuz by Iran, following coordinated strikes by the US and Israel on the Islamic Republic, has sent Brent crude prices soaring in 2026.
Brent began the year at approximately $61.98 per barrel and surged to around $114.57 by the end of trading on 27 March, following the outbreak of the Iran war on 28 February.
This sharp rally of about 85% is a result of a massive geopolitical risk premium. The catalyst was the closure of the Strait of Hormuz, which trapped nearly 20% of global oil supply.
Physical strikes on refineries, skyrocketing maritime insurance, and speculative hedging have further strained the market. For India, this spike threatens to widen the current account deficit and squeeze corporate margins across oil-dependent sectors.
However, oil and gas exploration companies tend to benefit from rising crude prices, as they realize higher selling prices while production costs remain relatively stable.
This expands profit margins, boosts cash flows, and increases earnings. Higher prices also improve the value of their reserves, strengthening overall financial performance and investor sentiment.
Here’s the caveat, though: If the government were to reimpose a windfall tax on domestic crude oil production, as it has done in the past, all profitability calculations can go awry. If no tax is imposed, these four stocks could be interesting to watch from the oil and gas exploration space.
Maharatna ONGC is the largest crude oil and natural gas company in India, contributing around 71% to Indian domestic production.
Crude oil is used by oil marketing and refining companies like IOCL, BPCL, HPCL and MRPL to produce petroleum products like petrol, diesel, kerosene, naphtha, and cooking gas (LPG).
ONGC is strategically important for India’s energy security.
Given the recent surge in crude prices, the nation is accelerating its energy security strategy by boosting domestic oil and gas production — a goal that has gained urgency due to geopolitical tensions and surging global crude price. ONGC is spearheading this campaign.
According to a report in the Economic Times, ONGC’s decision to float a global tender worth up to $20 billion (bn) to hire deepwater drilling rigs marks a turning point in India’s upstream strategy.
The sheer scale of the programme, combined with the requirement to mobilise rigs within 80 days, reflects a sense of urgency.
Drilling is being pushed into high-risk, frontier basins like the Andaman and Mahanadi, where commercial viability was previously considered too expensive at lower oil prices.
The new expansion initiatives are expected to boost production in the coming years. ONGC itself has been struggling with declining production in the past, which the company has now been addressing.
The Mumbai High Field, the TSP-1 is already showing encouraging production gains. Additionally, Daman Upside Development Project in Western Offshore is also on track to be monetized soon, with a peak gas output expected at 4 to 5 million metric standard cubic metres per day (MMSCMD).
ONGC also has a robust pipeline of over 20 major development, redevelopment, and infrastructure revamp projects under execution, with a total combined capex of about ₹77,000 crore.
These projects are designed to augment production, and sharpen operational efficiency, which will ensure sustained growth. Importantly, four key infrastructure and revamp projects are slated for near-term completion.
For KG-98/2, the company expects gas flow from these wells to start from the next quarter (April-June), and the gas would be ramped up.
Coming towards the end of FY27, the management of ONGC expects that this gas quantum should increase to 5-6 MMSCMD.
Overall, rising crude prices and government-backed exploration programmes, including deep-water drilling, support production growth at ONGC. Dividend payouts remain attractive. Risks include price volatility, execution of large projects, and long-term energy transition pressures.
Over the past month, the company’s shares are up over 1%.
The stock touched its 52-week high of ₹293.1 on 2 March 2026 and its 52-week low of ₹205 on 7 April 2025.
Next on the list is Oil India.
Oil India is a vertically integrated oil and gas exploration and production (E&P) company with expertise in the entire upstream E&P value chain, including seismic API, drilling, wireline logging, field development, production, reservoir management, IOR/EOR and pipeline laying.
While E&P business remains a core focus, the company has also diversified into downstream in order to balance the existing portfolios. It’s a majority stakeholder (69.63%) in Numaligarh Refinery, a 3 million tonnes per annum (MTPA) refinery in Assam.
Prime minister Narendra Modi early last month inaugurated the capacity augmentation project of the Numaligarh–Siliguri Product Pipeline (NSPL) of Oil India.
On the financial front, Oil India reported revenues of ₹9,111.4 crore in Q3FY26 (October-December) versus ₹9,089.1 crore year-on-year. Net profits of the company were ₹1,659.4 crore versus ₹1,593.2 crore year-on-year.
The company is currently undertaking a multi-layered expansion. This includes pipeline capacity increases for product transport, joint ventures and MoUs for new refinery and petrochemical infrastructure, upgrading and increasing refinery throughput capacity and strategic growth into downstream value chains and gas distribution networks.
Over the past month, the shares of the company are marginally down from ₹483.95 to ₹478.
The stock touched its 52-week high of ₹524.15 on 2 February 2026 and its 52-week low of ₹322.15 on 7 April 2025.
Next on our list is Vedanta Ltd.
The company is a diversified Indian natural resources company with businesses across metals, mining, and energy.
Vedanta is involved in oil and gas exploration and production through its subsidiary Cairn Oil & Gas. It became a major player after acquiring Cairn India and is now the largest private-sector crude producer in India, contributing around a quarter of domestic output.
The company undertakes exploration, development, and extraction across multiple oil and gas blocks in the country. This segment is a core part of Vedanta’s business portfolio, alongside metals.
Cairn has producing assets across Rajasthan, Andhra Pradesh, Gujarat, and Assam, and has spearheaded several technological innovations with high-reward prospects, over the last 30 years of its operations.
The management aims to contribute 50% of India’s domestic production, executing one of the largest exploration projects in the country across its diversified portfolio of conventional and unconventional projects - Tight Oil & Gas, Deep & Shallow Water, ASP Injection, Satellite Field Development. etc.
On the financial front, Vedanta Ltd reported revenues of ₹23,369 crore versus ₹17,063 crore year-on-year. Net profits were ₹3,672 crore compared to ₹2,013 crore a year earlier
Vedanta reported a Q3 FY26 profit surge driven by higher commodity prices (especially zinc and aluminium), improved volumes, and lower input costs.
Strong oil and gas performance and favourable currency movements further boosted margins, resulting in significantly higher overall profitability during the quarter.
Moving ahead, Vedanta has announced a major demerger to split its diversified businesses into 4–5 separate listed companies by around March–May 2026. The plan covers verticals like aluminium, oil and gas, power, and iron and steel, creating pure-play entities with separate management.
Shareholders will receive one share in each new company for every existing share held in Vedanta. The move aims to unlock value, improve operational focus, and attract sector-specific investors, while also helping address debt at the group level.
Over the past month, the shares of the company are down 9.6%.
The stock touched its 52-week high of ₹770 on 29 January 2026 and its 52-week low of ₹362 on 7 April 2025.
The company was incorporated in 1983 at a time when private participation in India’s oil and gas sector was limited, marking one of the early private ventures in the industry. As one of the pioneer private players in the Indian E&P sector, HOEC has a portfolio consists of nine oil & gas blocks of discovered resources and one exploratory block, with a diverse geographical footprint in four out of seven producing basins in India.
On the financial front, HOEC reported revenues of ₹75.4 crore for Q3FY26 versus ₹146.5 crore year-on-year. Net profit was ₹8.3 crore compared to ₹43.3 crore a year earlier.
Moving ahead, to unlock the potential of its offshore fields, Hindustan Oil Exploration plans to drill 10 offshore wells, three wells in PY1, threewells in B-80 and four wells in B-15.
The company’s reserves and resource potential are estimated about 100 million barrels of oil equivalent for its share. The company believes that these resources can be developed in a cost-effective manner, offering substantial value creation for all stakeholders.
Over the past month, the shares of the company are down from ₹130.8 to ₹121.10.
The stock touched its 52-week high of ₹197.80 on 23 April 2025 and its 52-week low of ₹117.90 on 16 March 2026.
Investing in oil and gas production stocks can be an opportunity, but it comes with significant risks that investors must carefully consider.
These companies, directly benefit from rising global crude prices, so when energy markets are bullish, their revenues and earnings can surge.
Additionally, many of these firms maintain a history of stable dividend payouts, which can provide a steady income stream even during periods of moderate price fluctuation.
However, there are important caveats. Crude oil prices are inherently volatile, influenced by geopolitical events, supply-demand imbalances, global economic trends, and decisions by major producers like OPEC countries.
A sudden drop in prices can erode profits quickly, even if production volumes remain stable. Furthermore, government tax policies introduce additional uncertainty.
India, for example, has a history of implementing windfall taxes on upstream producers during periods of high crude prices, and while such measures may not always be in effect, they can materially reduce earnings when applied.
Investors should weigh these risks against potential returns. Monitoring global oil trends and policy changes is essential for making informed decisions in this sector.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com