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Global crude oil prices are expected to remain elevated in medium term, said HDFC Securities.

Accordingly, the brokerage house's report, cited that Brent crude price which is currently at more than $75 per bbl has been driven by recovery in global demand with opening up of economies.

"The US was hit by Hurricane Ida in July end, which has resulted in disruption of production from Gulf of Mexico (GoM) of 1.7mb per day in August. The IEA expects supply from GoM to normalise by Q4CY22," it said.

"With crude oil and product inventory in lower half of the five-year range and EIA estimating global crude oil supply growth to lag demand growth in 2021 as economy global recovery continues to gather pace, we see an upside risk to crude oil prices."

Besides, the report also pointed out that domestic gas prices are set to witness a sharp jump.

"We estimate the domestic APM gas price to be revised upwards by over 60 per cent to $3 per mmbtu in H2FY22, and further by over 45 per cent to more than $4 per mmbtu in H1FY23 from current price of $1.79 per mmbtu.

"The APM gas price, which is currently at a decadal low, should rise sharply, supported by firming up of global gas prices post unlocking of economies and the current shortage of supply in Europe ahead of the winter season," it said.

According to the report, improving realisation will benefit upstream companies.

"We expect, in FY23E, ONGC (standalone) to produce 23 mmt of oil and 24.8 bcm of gas, and OIL to produce 3.2 mmt of oil and 2.6 bcm of gas."

"Increasing gas prices and rising Brent crude oil price should improve realisation and in turn drive earnings CAGR of 30-54 per cent over FY21-FY23E for ONGC and OIL. ONGC should also benefit from increase in gas production by up to 12mmscmd over FY21-25E as production from its KG basin blocks."