Shares of oil exploration companies saw gains on Wednesday following the government's decision to eliminate the windfall tax on domestically produced crude oil. This move, effective from September 18, significantly boosted investor confidence in the sector.
In early trading, Abans Offshore saw its share price rise by 2.5%, Hindustan Oil Exploration and Oil India shares each increased by 1.9%, ONGC climbed by 1.2%, and Selan Exploration gained 1.5%. This uptick in share prices occurred despite a generally subdued market, with the BSE Sensex rising by only 26 points to 83,100 at 9:55 AM.
The Indian government has removed the windfall tax on crude oil, previously set at ₹1,850 per tonne, amid falling oil prices. This marks the second instance this year where the government has cut the tax to zero, with the previous reduction occurring on April 4, 2023.
Brent crude oil prices have dropped by over 20% from their recent peak of $91 per barrel to around $73 per barrel. Year-to-date, Brent crude has fallen approximately 5%. Concerns about a slowing US economy and sluggish demand from China have driven the decline.
The windfall tax on crude oil producers was first introduced in July 2022 and has been reviewed bi-weekly by the government. Prior to this latest reduction, the tax had been adjusted from ₹2,400 per tonne to ₹2,100 per tonne on August 17 and then to ₹1,850 per tonne on August 31.
For those looking to invest in stocks, the removal of the windfall tax could make shares of oil exploration companies more attractive. The current market environment presents an opportunity for investors to consider these stocks, particularly given the recent tax changes and falling oil prices.
Investors keen to buy shares online may find the current adjustments beneficial as they reflect broader economic shifts and government policy impacts on the energy sector.
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