ONGC and Oil India sink as government imposes windfall tax on production

The shares of Oil and Natural Gas Corporation and Oil India fell after the government imposed a special excise duty on crude oil production.

The government has imposed special excise duties or windfall gains tax on the oil and gas industry in order to curtail some of the outsized benefits.

The benefits of high global crude oil prices will be limited by the new excise duty.

The shares of refining and oil drilling fell.

After a sharp surge in global crude oil prices earlier this year, several brokerage firms have upgraded their ratings or price targets on both the stocks.

The price of crude oil has risen more than 40 percent since the sanctions were imposed on Russian crude oil exports.

In March, the price of crude oil was as high as $137 per barrel, but has since fallen. Strong demand and limited global supplies are expected to keep crude oil prices above the $100 per barrel mark over the next eighteen months.

Analysts had expected an upgrade to the earnings per share of both the companies due to the expected rise in crude oil prices.

At 10:45 am, shares of ONGC were down sank 10 percent to Rs 136.4 on the National Stock Exchange while those of Oil India plummeted 6.8 percent to Rs 234.50.