Any major rise in the Middle East conflict or a sharp increase in crude oil prices could badly impact the earnings of Indian oil and gas companies. The risk is higher for Oil Marketing Companies (OMCs) and gas utilities.
Crude Oil Price Swings Have Mixed Impact
Right now, Indian oil and gas companies are seeing mixed results due to the unstable global crude oil prices.
As per a report by ICICI Securities, crude is trading at $73–$74 per barrel. This level has already affected the profits of OMCs. However, upstream oil producers may benefit.
The report stated, "We estimate a material impact on OMC earnings and upside risk to upstream earnings even with crude at USD 73-74/bbl as is the case now."
If Prices Rise Further, Trouble Will Grow
The report warned that further hikes in crude oil may not help upstream companies much. But OMCs and gas utilities could suffer more.
This is because liquefied natural gas (LNG) prices follow crude trends. If crude rises, LNG costs will also go up, making gas supply more expensive.
Analysts Still Watching the Market
So far, analysts have not changed their forecasts or ratings for the energy sector. They are closely observing the situation and plan to wait before revising earnings projections.
The report pointed out that the current price of crude is still lower than both the average for FY25 and the four-year average.
No Immediate Threat to Company Profits
Because of that, the overall impact on the profit margins of Indian oil and gas companies does not look severe at this point.
Despite stable prices, the stock values of energy firms are falling. This suggests investors are nervous.
One key worry is that the Middle East conflict may block oil and gas routes through the Strait of Hormuz, a major global energy pathway.
Another concern—though unlikely—is the possibility of NATO getting involved. This could happen if Iran targets Western military bases in the region.
Brent Crude Still Above Estimates
Currently, Brent crude costs around $75 per barrel. That’s $6–$7 more than the projected average of $68 for FY26. This price gap could lower the earnings per share (EPS) of OMCs, although upstream firms may benefit.
Still, prices are $9 lower than the FY22–25 average, and $4 below the FY25 average. This shows that oil supply is enough globally, and demand remains weak.
Final Word: More Price Hikes Could Be Dangerous
In conclusion, ICICI Securities has kept its earlier projections unchanged for now. But it has warned that if crude prices climb higher or if the Middle East situation worsens, the profits of Indian oil and gas firms could take a big hit.