India Oil Gas Margins Squeezed by Iran War and LNG Prices Soar

India's oil and gas industry is facing significant challenges due to rising crude oil and LNG costs, exacerbated by elevated shipping expenses. The Iran conflict has disrupted international energy trade routes, further compressing marketing margins for gasoline and diesel.

Equirus, an Indian brokerage, noted that stronger refining margins have cushioned some of the strain, but margins for gasoline and diesel marketing remain in negative territory. Elevated LNG prices in Asia are anticipated to further compress gas-sector margins, likely reducing September import volumes.

Asian spot LNG prices climbed to their steepest point since 2022, driven by concerns over Middle Eastern supply reliability and heightened rivalry between Europe and Asia for winter inventories. The current price level stands 61% above the same period last year and has advanced 22% over the last three months.

India's LNG imports are expected to decline this month relative to the robust arrivals seen in August, as per Equirus. The steep LNG costs are weighing heavily on India's largest gas consumers, whose expenditure remains exceptionally high.