Middle East Crude Supply Plummeting Amid Ongoing Conflict

The ongoing conflict in West Asia has led to significant disruptions in Middle Eastern crude oil supply. According to an S&P Global report, production capacity has not been permanently lost, but security and logistical challenges are limiting the amount of oil that can reach the market. Before the war, Middle Eastern crude supply stood at around 20 million barrels per day (b/d), but due to ongoing tensions, it is expected to average only 10-16 million b/d through 2027.

The report notes that Brent crude prices recently topped $100 a barrel for the first time since July, and this persistent disruption risk is settling into a new normal. S&P Global Energy's Vice President and Global Head of Crude Oil Research, Jim Burkhard, stated that 'the market is adjusting to the new normal defined by unresolved conflict and persistent Maritime risk, one where oil flows stay below prewar levels and the path forward remains uneven.'

Among Indian oil marketing companies, Hindustan Petroleum Corporation (HPCL) may be the most vulnerable due to its low refining-to-marketing ratio and high dependence on purchased products. In contrast, IOCL and BPCL have stronger integration and better balance sheets.