Indian oil and gas stocks could see an immediate relief rally if the ongoing Middle East conflict ends or sharply de‑escalates, particularly if traffic resumes smoothly through the Strait of Hormuz. Market expectations suggest a knee‑jerk pullback in crude oil and LNG prices, easing pressure on downstream and gas utility stocks that have borne the brunt of recent volatility. However, analysts at CLSA believe the bigger medium‑term opportunity may lie with upstream producers such as ONGC, Oil India and Reliance Industries, as post‑war energy markets are likely to settle at structurally higher price levels than before the conflict, reshaping the sector’s supply‑demand dynamics.
“If the war were to end tomorrow… Post-war crude and LNG price may settle at 15-25 per cent higher than pre-war,” CLSA noted. The report further added that any news on the opening up of the Strait of Hormuz may drive a reflex pullback in crude oil and LNG prices and recovery in Indian downstream oil & gas stocks.
The brokerage highlighted that it expects a much tighter post war supply-demand for oil and LNG versus pre-war levels due to risks on pace of restart of production from the Gulf as well as likely new re-stocking demand.
In the immediate aftermath of a ceasefire or de‑escalation in the Middle East—especially if it allows unhindered movement through the Strait of Hormuz, global markets are expected to react with a sharp pullback in crude oil, LNG and tanker freight rates. These commodities have seen the steepest spikes since the conflict began. Indian downstream oil marketing companies, which have corrected sharply by 24–26 per cent, and gas transmission and city gas stocks that have fallen 10–18 per cent, are likely to stage a relief rally as input costs ease and price volatility subsides, the brokerage noted.
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