ONGC, Oil India Share Price Today Jumps After Centre's Crude Royalty Cut | What It Means for Investors?

ONGC, Oil India Share Price: Shares of Oil and Natural Gas Corporation Limited (ONGC) and Oil India rallied during Tuesday's intraday trading session. The surge in upstream oil and gas company shares came after the central government announced rationalisation of royalty rates on crude oil and natural gas production.

ONGC share price was trading 3.81% higher at Rs 291.65 per share on BSE with a market capitalisation of Rs 3,66,903.84 crore at 9:40 am on Tuesday. Oil India stock was 5.86% higher at Rs 483.3 per share on BSE with a market capitalisation of Rs 78,613.95 crore.

Centre Cuts Royalty On Crude Oil, Natural Gas Production

The government has approved the rationalisation of royalty for India's upstream sector. This would benefit oil & gas (O&G) regimes by eliminating inconsistencies and driving growth in the upstream, as per a social media post by Union Minister of Petroleum and Natural Gas Hardeep Singh Puri.

"This landmark decision will be a major step toward regulatory clarity. Following the historic 2025 amendments to the ORD Act & PNG Rules, the Government has rationalized royalty rates & methodologies for Crude Oil, Natural Gas, and Casing Head Condensate," as per a social media post shared by Hardeep Singh Puri.

Key Changes Announced By Govt

The central government has approved the rationalisation of royalties, which means that crude oil, natural gas, casing head and different regimes will attract lower royalty rates. Following the historic 2025 amendments to the ORD Act & PNG Rules, the Government has rationalized royalty rates & methodologies for Crude Oil, Natural Gas, and Casing Head Condensate." This would bring uniformity across different contractual and policy regimes.

What It Means For ONGC and Oil India?

The central government's decision is positive for upstream energy companies, particularly ONGC and Oil India. Lower royalty payouts directly improve operating margins, free cash flow, and project viability, according to Tushar Badjate, Director of Badjate stocks and shares pvt. Ltd.

ONGC Share Price Outlook

"For ONGC, the move could support earnings upgrades and strengthen investor sentiment toward the stock, which has historically traded at discounted valuations due to policy overhangs. The reforms also indicate a more supportive government stance toward the upstream sector, which may encourage fresh investments in exploration and deepwater assets," explained Tushar Badjate.

Oil India Share Price Outlook

"Indian Oil Corporation is unlikely to see a direct earnings impact from the royalty revision, given its downstream refining and marketing focus, but stronger domestic production economics improve the broader energy ecosystem and long-term supply stability. Overall, the policy shift is structurally positive for India's upstream oil and gas space and could keep ONGC and Oil India in market focus over the medium term," Badjate added.

Brent Crude Oil Price Rally

The central government's decision has come as the Brent crude oil price continued to rally significantly. Brent crude oil which used to trade close to $75 per barrel few months ago, is now trading above $100 per barrel. Brent crude futures were priced at $105 per barrel on Tuesday, as per Trading Economics.

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