Oil and energy stocks are in focus this morning. Oil And Natural Gas Corporation and Reliance Industries spiked in morning trade as the stocks reacted to the news of the US capturing Venezuela’s president. A major change is currently underway in the global energy market given the fast-changing geopolitical dynamics there. According to the latest research from Jefferies, this geopolitical manoeuvre is expected to trigger a significant windfall for India’s energy titans. While Venezuela holds a staggering 18% of the world’s proven oil reserves, it currently accounts for less than 1% of global production. Jefferies sees this as a clear catalyst for Indian companies to capitalise on a revival of the region’s output.
Jefferies maintains a ‘Buy’ rating on ONGC with a price target of Rs 310 per share, suggesting a 28% increase. The firm also has a ‘Buy’ rating on Reliance Industries with a target of RS 1,785, implying a 12% rise from recent levels.
ONGC: Thawing the $500 million “frozen” paycheck
For the state-owned ONGC, the primary “hook” for investors is the potential recovery of over $500 million in unpaid dividends from the San Cristobal field. These funds have been stagnant for years due to geopolitical standoffs and payment restrictions. Jefferies notes that with the US stepping in to manage the sector, ONGC may finally stand to collect these long-pending dues.
This recovery serves as a non-trivial cash event. Beyond just back-pay, Jefferies points out that ONGC might finally move forward with the development of the Carabobo field in the Orinoco belt, where it holds a strategic 11% equity stake. This is a vital step as ONGC looks to expand its overseas production through its subsidiary, ONGC Videsh. Jefferies expects these factors to drive the company’s Consolidated EPS to Rs 34 by FY26e, noting that the stock’s sub-1x price-to-book multiple leaves significant room for a re-rating once this trapped capital is released.
Reliance: Reclaiming the “VIP Discount Card”
Reliance Industries is positioned by Jefferies as a primary beneficiary because of its unique refining setup. The core advantage lies in the nature of Venezuelan crude, which is heavy, sour, and acidic. Because very few refineries globally are equipped to process such complex oil, it historically trades at an “advantaged” price, often a US$5-8 per barrel discount to Brent.
Jefferies notes that before 2019, Reliance had a strategic agreement to purchase approximately 20% of its daily crude requirements from Venezuela’s state oil company, PDVSA. If the US begins selling Venezuelan crude to global buyers, Jefferies expects Reliance to once again secure these supplies at deep discounts, directly aiding its Gross Refining Margins (GRMs). This comes as the company’s financial health remains robust, with Jefferies projecting net revenues to grow from RS 9.64 lakh crore in FY25 to over RS 10.23 lakh crore in FY26E.
Jefferies’ medium-term global market outlook
While Jefferies expects the near-term impact on global oil prices to be minimal given Venezuela’s low current output, the firm sees a different story for 2027 and 2028. Jefferies anticipates that US oil majors will likely commit to large-scale investments to revive Venezuelan production once the political situation settles.\
If these investments succeed in bringing significant new supply to the market, Jefferies warns it could put downward pressure on global crude prices toward the end of the decade. For a major oil importer like India, Jefferies views this as a macroeconomic tailwind that could support the broader economy in the coming years.
Jefferies on projected earnings and operational risks
The Jefferies report provides specific financial projections for the 2026 fiscal year, estimating Reliance’s attributable EPS will rise to RS 64.64. However, Jefferies identifies specific risks. For Reliance, the firm points to a high rate of cash consumption in its e-commerce business and the risk of weaker petrochemical margins. For ONGC, Jefferies notes that performance depends on meeting production targets at domestic assets like the KG 98/2 field and the stability of Brent crude prices.
The valuation anchor
Jefferies views this geopolitical shift as a long-awaited insurance payout for these companies. ONGC is finally on the verge of collecting a massive “back-pay” check it has been owed for years, while Reliance is getting back its exclusive access to buy raw materials at a deep discount. While the Venezuelan reopening serves as a powerful catalyst, Jefferies bases the investment thesis on fundamental valuation metrics, providing a margin of safety for investors looking to play this global energy move.
