Fears of supply disruption across the Strait of Hormuz have kept the energy market on tenterhooks. Motilal Oswal has put out a sector update dated 1 March assessing what this geopolitical rupture means for Indian oil and gas companies, and the verdict is split sharply down the middle. Upstream producers and shipping firms stand to gain. Oil Marketing Companies (OMCs), City Gas Distribution (CGD) companies, and gas utilities are staring at serious margin pressure.
Here is everything Motilal Oswal’s analysis tells you about who wins, who bleeds, and why.
1. The Strait of Hormuz is not just any chokepoint; it is the world’s oil jugular
The Strait of Hormuz carries roughly 15% of global crude oil consumption and about 8% of global refined product consumption every single day. Nearly 20% of all Liquefied Natural Gas (LNG) traded globally, including almost the entire export volume from Qatar and the United Arab Emirates, moves through this narrow passage.
“The Strait of Hormuz is one of the most critical energy chokepoints globally. \15/6 million barrels per day of crude oil and refined products transit through the SoH, accounting for nearly 15% of global crude consumption and around 8% of global refined product consumption,” says Motilal Oswal.
Alternative routes exist but offer limited buffer. Motilal Oswal says alternate passages can handle only about 70-80 lakh barrels per day against the current 2.1 crore barrels per day that move through the strait. Diversions would also entail meaningfully higher freight costs.
2. Upstream oil producers are the clear beneficiaries
A closure or even a partial Iranian blockade would push crude prices sharply higher, which benefits India’s upstream exploration and production companies.
“There is currently no windfall tax in place, and Brent is already trading close to $75/bbl. While we have a Neutral rating on both ONGC and Oil India, note that a $5/bbl change in oil prices impacts FY27 standalone EBITDA by ~8% for ONGC and ~11% for Oil India,” says Motilal Oswal.
Oil And Natural Gas Corporation (ONGC) and Oil India (OIL) would see EBITDA expand materially for every $5 per barrel increase in Brent. The absence of a windfall tax means gains flow through without additional levies at this stage, as noted in the report. Motilal Oswal maintains a Neutral rating on both stocks.
3. Shipping companies could ride the charter rate wave
Geopolitical disruptions tend to tighten vessel availability, supporting charter rates.
“Shipping companies are also likely to benefit, as geopolitical disruptions typically tighten vessel availability and support charter rates. The sector has already witnessed strong performance over the past five years amid elevated freight rates,” says Motilal Oswal.
Around 40-45% of GE Shipping Company’s fleet comprises oil and product tankers, according to the report, positioning it to benefit if rerouting and supply disruptions drive freight rates higher.
4. Standalone refiners get a lift too, but it is not unconditional
Motilal Oswal says MRPL and MRL (Chennai Petroleum), which is not rated, could benefit if refining cracks remain elevated and inventory gains accrue.
“MRPL and MRL (Chennai Petroleum) could also benefit amid high refining cracks and possible inventory gains,” says Motilal Oswal.
The report’s refining margin charts show that Gross Refining Margins for OMCs have been volatile in recent quarters, underscoring how sensitive profitability is to crude swings.
5. OMCs are looking at serious margin erosion
India’s major OMCs like Indian Oil Corporation (IOCL), Hindustan Petroleum Corporation (HPCL), and Bharat Petroleum Corporation (BPCL), face pressure if crude prices spike faster than retail adjustments.
“A potential $10/bbl spike in crude prices could erode marketing margins by ~Rs4.5/litre, with only partial offset from improved refining margins and possible inventory gains,” says Motilal Oswal.
The report also notes that propane prices have risen by about $75 per tonne month-on-month to $600 per tonne amid ongoing supply disruptions from Saudi Arabia.
Implied gross marketing margin data in the note shows margins swinging from negative territory in early 2023 to above Rs10 per litre in later quarters, reflecting how exposed OMC earnings are to crude volatility.
6. City gas distribution companies face a double squeeze
CGD companies such as Gujarat Gas (GUJGA), Indraprastha Gas (IGL), and Mahanagar Gas (MAHGL) are exposed to higher input costs if Brent and spot LNG prices stay elevated.
“Higher Brent and spot gas prices imply elevated gas sourcing costs, pressuring margins,” says Motilal Oswal.
The EBITDA per standard cubic metre trend for CGDs in the report shows moderation over recent quarters, indicating sensitivity to input cost movements.
7. Gas utilities like GAIL and PLNG face a slow burn, not an immediate hit
For Gas Authority of India (GAIL) and Petronet LNG (PLNG), Motilal Oswal sees limited immediate impact but rising risk if spot LNG prices remain elevated for long.
“For gas utilities such as GAIL and PLNG, we see limited immediate impact at this stage. However, if the situation persists for a prolonged period and leads to sustained elevation in spot LNG prices, earnings could be negatively impacted due to higher sourcing costs and potential demand-side pressure,” says Motilal Oswal.
The report points to higher sourcing costs and possible demand-side pressure if elevated spot prices persist.
8. Reliance Industries gets a mild positive, mostly from refining
Motilal Oswal takes a neutral to marginally positive view on Reliance Industries.
“We could see a minor positive impact for Reliance Industries should refining margins strengthen. Additionally, the company’s ability to source multiple feedstocks for its petrochemical operations provides operational flexibility amid commodity price volatility,” says Motilal Oswal Financial Services in its 1 March 2026 sector update.
The benefit, as per the report, would stem from stronger refining margins and feedstock flexibility rather than direct upstream exposure.
Conclusion
Motilal Oswal’s sector update concludes that if the Strait of Hormuz disruption deepens or prolongs, upstream producers such as ONGC and OIL, shipping companies such as GE Shipping, and standalone refiners such as MRPL could benefit. OMCs, CGD companies, and gas utilities face earnings pressure if crude and LNG prices remain elevated. The divide, according to Motilal Oswal, is driven by who sells at global prices and who buys at them.