ONGC wasn't gladdened like the rest of the corporate world with the fact that oil prices had tumbled to a 3-month low after the US launched its war on Iraq on Thursday.

The scrip of the critical state-run oil explorer slipped 1% on BSE to Rs 357 in early trades. It was trading near the day's low of Rs 356.75. A total of 3,300 ONGC shares were traded on BSE in just half-an-hour of trading. The scrip lost 1.5% on Wednesday to Rs 360.60 after a sharp setback was witnessed in global oil prices on Tuesday.

ONGC has been moving in consonance with the global trend of crude prices of late. The scrip surged 7% to a high of Rs 385.65 on 3 March 2003 in 12 trading sessions from Rs 360.30 on 12 February 2003. This, after global crude oil prices reached multi-year highs in late February 2003 amid heightening fears of a war. The scrip came off to Rs 360.60 on 19 March 2003 and has retreated further on Thursday.

ONGC has been hurt by reports that US crude dropped $1.06 a barrel to a 13-week low at $28.82 following news of the attack. In the last five days, a massive 21% has been eroded from oil prices ahead of the expiry of the deadline for Iraqi president Saddam Hussein to flee Iraq. With war actually manifesting, oil prices dipped further today. The US began its war against Iraq, in the wee hours (Iraqi time) Wednesday, by bombing selected targets on the outskirts of Baghdad.

US president George Bush said in an address to the American people that he will apply the full might of the US military to achieve a swift victory. He, however, warned that the conflict could take longer than expected and could prove more difficult than was predicted.

ONGC is the largest crude oil producer in India and, therefore, the trend in global crude oil prices is seen as a key for the stock.

Some time ago, ONGC was reported to have signed an agreement with state-run oil refiners BPCL, HPCL and IOC whereby it would receive an extra $5 per barrel of crude over the normal price of $21 a barrel.

The financial performance of ONGC has been impressive of late. For the third quarter ended 31 December 2002, ONGC recorded an 84% rise in net profit to Rs 2,593.47 crore (Rs 25.93 billion) on a 35% increase in net sales to Rs 7,604.99 crore (Rs 76.04 billion).

Though oil prices have come off the highs, with the beginning of war, worries persist about the disruption of oil supplies and oil shortages if Iraq embarks on setting oil wells afire.

On 31 December 2002, the Centre held 96.13% stake in ONGC, while the public and institutions held 1.22% and 2.27%, respectively.

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