Oil Prices Set to Rise Amid US-Iran War Tensions

Brokerage firm CLSA has predicted that oil prices will rise in the next two to three months, which could be positive for ONGC and Oil India but negative for Indian Oil Corporation, BPCL, and HPCL.

This prediction is based on CLSA's analysis of the global oil market, which suggests that China, the US, and OECD have released 70% of their strategic reserves to meet a 1 billion-barrel supply shortfall from March to July 2026. However, CLSA believes that this will lead to a pick-up in imports from China, Korea, and Japan as they become less willing to further deplete their severely depleted strategic reserves.

The expected rise in oil prices is also attributed to the ongoing US-Iran war, which has led to an energy crisis in the Strait of Hormuz. The conflict has resulted in extreme volatility in oil prices since February 28, with Brent crude surging past $95 a barrel after recent flare-ups in West Asia.

According to CLSA, the increase in oil prices will be negative for downstream refining firms such as IOC, BPCL, and HPCL, while it will be positive for upstream oil firms like ONGC and Oil India. Additionally, the rise in oil prices will also impact FMCG companies, paint companies, and tyre companies that use crude and its derivatives as key input components.