State-run oil firms’ shares leaped on Thursday after a hike in fuel prices gave hopes of a lower fuel subsidy burden for the companies.

For the first time this year, the prices of petrol and diesel were hiked suddenly on Wednesday night. The government-controlled fuel pricing forces state-run firms such as Oil and Natural Gas Corporation (ONGC) to partly subsidise state oil marketing companies, which in turn, sell products at low prices to consumers.

Earlier in the day, Chairman of ONGC RS Sharma said that the company's fuel subsidy burden for the current year will be significantly lower than the previous year, if the crude prices stay around the current level. 

"If the prices remain around $70 a barrel, surely the subsidy burden is going to be less," Sharma said when asked if the recent fuel price hike would help ease the company's subsidy burden.
State-run oil refining and marketing companies Indian Oil, Hindustan Petroleum, and Bharat Petroleum surged 1.7-3.1% in early trade.

"With the pass-on of prices at a fast pace, the government has not only reduced the long-term under-recovery burden on the sector, but has also increased our confidence in its intent to pass on prices to consumers," Edelweiss Securities said on Wednesday.