The brokerage said that as per its analysis an estimated 70% of over 1 billion barrels supply shortfall from the Strait of Hormuz countries from March to July 2026 was met by releases from strategic reserves of China, US and Organisation for Economic Co-Operation and Development (OECD).
A limited upmove in crude oil prices, sharp backwardation of futures curve and below average net-long positioning is signaling that the market is expecting a more relaxed demand-supply scenario.
However, CLSA differs on this aspect, as it sees a low likelihood of a relief in near-term supply, while it fears a pick up in imports from China, Korea and Japan as they become less willing to further eat up from their severely depleted strategic reserves.
The brokerage expects this to drive up oil prices within the next two to three months, which would be positive for Oil and Natural Gas Corporation (ONGC), Oil India but a big negative for Indian Oil Corporation (IOC), Bharat Petroleum Company (BPCL) and Hindustan Petroleum Company (HPCL).
An increase in crude oil prices is generally positive for upstream oil firms such as ONGC and Oil India, while it is negative for downstream refining firms such as Indian Oil, HPCL, BPCL and Indian Oil.
A rise in oil prices is also negative for FMCG companies, paint companies, tyre companies, who use crude and its derivatives as a key input component. Higher costs therefore impact their margins, impacting the overall earnings performance.
The US-Iran war, which started on February 28, 2026, has now entered its seventh month. Having cooled to levels of $70 after the ceasefire announcement in June, Brent crude prices are back near the $100 a barrel after the recent flare-up in West Asia drove prices higher again.
On Tuesday, Brent crude surged past $95 a barrel after the US Central Command said it launched targeted strikes against the Iran Revolutionary Guard Corps, the completion of which was announced on Wednesday in the early hours.
US president Donald Trump, in a Truth Social post, also said that if Iran retailiates against this “justified” attack, the US would hit it harder and an even bigger attack was awaiting in the wings post which “nothing much will be left of the Islamic Republic of Iran,” as per Trump.
The start of the US-Iran war led to an energy crisis as the Strait of Hormuz, a key waterway for oil trade to the east, became a conflicting zone, with Iran not allowing ships to pass through, hence leading to extreme volatility in oil prices ever since February 28.
Shares of ONGC were trading flat at ₹236.6 apiece and Oil India were down 0.2% at ₹488.8 apiece at 9.29 am on Wednesday. Meanwhile, IOC was down 1.3% at ₹134.79, HPCL and BPCL were down 1.1% each at ₹359.2 and ₹314.2 apiece, respectively.
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