High Crude and LNG Prices Weigh on India’s Oil and Gas Sector
The renewed rally in crude oil and LNG prices and the higher freight costs are pressuring the marketing margins of India’s oil and gas sector, which has to contend with the fallout of the Iran war on global oil and LNG trade flows. Increased refining margins offset some of the downward pressure, but gasoline and diesel marketing margins remain negative, while high LNG prices in Asia would squeeze…
A report by India-based brokerage Equirus reveals that high crude oil and liquefied natural gas (LNG) prices are negatively impacting India’s oil and gas sector. The renewed rally in crude oil and LNG prices, coupled with higher freight costs, is putting pressure on marketing margins. India’s oil import bill has surged, while gasoline and diesel marketing margins remain negative, and high LNG prices in Asia may lead to softer September imports of LNG.
The LNG spot price in Asia surged to its highest level since 2022, increasing by 61% compared to last year and 22% over the past three months. This surge is due to uncertainty about LNG supply from the Middle East and intensifying competition between Europe and Asia for winter gas supply. Consequently, India’s LNG imports are anticipated to decrease this month following strong arrivals in August.
High LNG prices are also putting pressure on India’s major gas consumers, who face very high costs. Meanwhile, the country’s crude oil import bill has skyrocketed due to reduced oil flows from the Middle East and heightened risks to shipping in the Strait of Hormuz. Freight rates on the key route from Ras Tanura in Saudi Arabia's Persian Gulf to India have soared by more than 400% since the war began, and Iran's closure of the Strait of Hormuz has exacerbated the situation.
Written by urgent.news from OilPrice's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
