Share price of oil marketing companies jumped on Monday morning as crude oil prices plummeted as much as 31 per cent. Bharat Petroleum Corporation Limited share price jumped 10.5 per cent to trade at Rs 445 per share; Hindustan Petroleum Corporation Limited was up 9.5 per cent to touch Rs 220 and Indian Oil Corporation gained 2.6 per cent trading at Rs 103.5 apiece. Oil prices plummeted as much as 31 per cent on Monday morning, to reach its lowest since 1991, as Saudi Arabia announced plans to increase production in the aftermath of the fallout with Russia over output cuts.

While Oil Marketing Companies gained after the cut in prices, it was not all merry for oil explorers like Oil and Natural Gas Corporation (ONGC) and Reliance Industries. ONGC saw its share price fall 11 per cent to Rs 79 per share; Reliance Industries was down 7.4 per cent to trade at Rs 1,177 apiece. 

In a note, before Saudi Arabia announced it would ramp up production, ICICI Securities termed an increase in output by OPEC+ as the “Worst case scenario”. The note added, “Worst-case scenario is: not only does global oil demand fall in CY20E and Libyan output rebounds to 1m b/d, but OPEC+ also boosts output from April 2020. Note that OPEC+ did not extend its existing production cut of 2.1m b/d beyond March 2020. OPEC+ raising output from April 2020 would lead to a bigger supply surplus and further oil price fall, which may test February 2016 lows.”

Saudi Aramco Share price fell below its initial public offer (IPO) price on Sunday.  Aramco shares were trading at 31.10 riyals ($8.29) at 0724 GMT, down 5.8%, and below the IPO price of 32 riyals. Brent crude futures were down 25 per cent trading at $33.96 per barrel, their lowest since February 2016. US West Texas Intermediate (WTI) crude fell 26 per cent to %30.5 per barrel.

Saudi Arabia has slashed its prices, the most in 20 years after the fallout with Russia and has said that it will ramp up production resulting in more Crude oil available in the market that is facing demand shortage. On the other hand, Russia has stated that its companies were free to pump as much as they could.