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Informist, Thursday, Mar. 5, 2026

 

MUMBAI – The disruption of supplies of crude oil and natural gas following the closure of the Strait of Hormuz and a halt in operations of several oil and gas facilities amid hostilities in West Asia are likely to keep crude oil and liquefied natural gas prices high in the coming days, brokerages said. Companies involved in LNG production will be under pressure from lower domestic LNG reserves and the shutdown of Qatar's Ras Laffan plant. However, adequate crude oil reserves in India and expectations of an early end to the military conflict will shield domestic oil marketing companies from price volatility, they added. Higher Brent crude oil and LNG rates mean stocks of oil explorers could be good bets for the short term, they said.

There is a chance that crude oil prices could jump to $90-$100 per barrel in the near term if Iran is able to block the key waterway for a prolonged period, JM Financial Institutional Equities said in a report. The brokerage, however, sees this as a low-probability event, given historical precedents of past wars and the US Navy's commitment to escort tankers through the Strait of Hormuz. Yet, in a departure from past conflicts, Iran has responded to the attack on it by Israel and the US by targeting not just Israel but US military bases and facilities as well as the energy infrastructure in several of its neighbours, ICICI Securities said. Tehran has also warned that all shipping through the Strait of Hormuz would be fair targets for its armed forces. Despite this, ICICI Securities believes shipping through the strait will resume in coming weeks.

 

Back home, brokerages said India's inventory is sufficient to meet demand for several months even if crude oil imports via the Strait of Hormuz are reduced to zero. JM Financial said it will be between three and three-and-a-half months before India's stock of crude oil runs out. India's total crude and oil product inventory is likely to be sufficient to meet 35–40 days of domestic demand, assuming that Indian Oil Corp. Ltd. maintains 45–50 days of crude oil inventory and another 10–15 days of product inventory and the other refiners maintain 15–20 days of crude oil inventory and 10–15 days of product inventory, the brokerage said. These numbers include an assumption that India's strategic crude oil reserves could last for about six days.
 

Brokerages were unanimous that gas companies will be under pressure from higher costs due to lower domestic inventory and the closure of key facilities in West Asia. The explosion in the Ras Laffan industrial complex, which led Qatar to suspend all LNG production, will weigh on the margins of these companies, brokerages said. Ras Laffan has the world's largest artificial harbour and is among the biggest petrochemical export ports. Indian imports from Qatar, including term and spot or regasificiation cargoes, were around 13 million tonnes per annum, or around 50% of overall LNG imports, ICICI Securities said. The brokerage sees this disruption having material implications for gas companies and downstream sectors. 

 

The production shutdown in Qatar is a net negative for companies dependent on LNG imports and 35–40% of the country's LNG imports will be affected, JM Financial said. The brokerage sees this hurting Petronet LNG Ltd., GAIL (India) Ltd., Gujarat Gas Ltd., and other gas companies. Petronet LNG gets around 50% of its gas supply from Qatar. The company has issued force majeure notices to its customers such as GAIL, Indian Oil Corp., and Bharat Petroleum Corp. Ltd. India's gas marketing companies have also told industrial customers they would receive 10-50% reduced supply. 

 

Oil explorers such as Oil India Ltd. and Oil and Natural Gas Corp. Ltd. were key picks for most brokerages, considering the higher crude oil prices. A weak rupee will also help these companies' financials, they said. For every $1 per-barrel increase in Brent crude oil price above $70 per barrel, ONGC and Oil India's earnings per share goes up by 1.5-2%, JM Financial said. Emkay Global Financial Services raised the target price on both stocks by 5% to INR 315 and INR 550, respectively. 

 

The gross marketing margin of automobile fuel for domestic oil marketing companies could be hit if Brent crude oil price stays above $70 per barrel, JM Financial said. For every $1 per barrel rise in crude oil price, these companies' gross automobile fuel marketing margin declines by INR 0.55 per litre, as per the brokerage's calculations. Hindustan Petroleum Corp. Ltd. will be the worst hit, given its highest exposure to the marketing business, the brokerage added.

 

The sharp rise in crude oil prices and refining cracks has led to a decline in integrated automobile fuel margins, Emkay Global added. However, based on the current rates, these companies will see better earnings before interest, tax, depreciation, and amortisation sequentially in the March quarter, it said. Higher core gross revenue margins and potential inventory gains of $5–$6 per barrel are likely to drive these gains, the brokerage added.  End

 

Reported by Eshitva Prakash

Edited by Rajeev Pai

 

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