Global Energy crisis may propel this stock!

We have seen a surge in gas prices across the globe due to shutdown (reported as maintenance till July 2022 )of the NORD pipeline from Russia to Germany via the Baltic sea. After the shutdown , another crisis hit the pipeline where multiple potential leak led to stoppage of gas pipeline. However the Yamal pipeline is active via Belarus from Russia to Poland and Germany . But Russia is adamant on Europe revoking the sanctions else it will be forced to close down the pipeline and gas supply.

So what does it means for global precious commodity i.e OIL ? I am a firm believer that global geo political decision are based around the production and prices of OIL and that its a highly managed commodity , in that sense its prices , supply , demand etc is managed by world leaders. Hence i believe they will take full advantage of this situation and we can see new highs crude prices.

In that sense its bad for us as India imports 85% of its Crude needs but certain players may benefit from the high prices. One of such leading player is Reliance Industries. Reliance has been very aggressive in grabbing opportunities with both hands and has been the largest accumulator of Russian oil amidst global sanctions. This will be evident in the Q2 results of the company. Going ahead we expect the energy crisis to deepen unless there are some talks between Ukraine and Russia to cool down the global prices.

The company will also benefit from the removal of duties and windfall taxes of fuel and ATF.

We expect the stock to see levels of 2570 in October series ( Current price 2398) and a price of 2970 by December 2022.

Below is the snapshot from Refinitiv website post Reliance’s Robust results following the price hike of Brent crude uptill $120

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