The Iran-Israel war leading to a flare up in crude oil prices, which surged from $69 per barrel to $74 within 24 hours on June 12-13, coupled with the intensifying conflict may push up Administered Price Mechanism (APM) gas and New Well Gas (NWG) prices.

On late Thursday evening, Brent was trading higher at $77.71 a barrel.

Ratings agency ICRA pointed out that India’s liquefied natural gas (LNG) imports may face risk if situation worsens around the Strait of Hormuz (SoH) considering nearly 54 per cent of Indian imports pass through the channel.

“Disruption in the SoH may result in supply uncertainties from Qatar and the UAE, which may result in higher dependence on the spot LNG market. Any such disruptions are also expected to result in higher spot LNG prices as well as higher LNG tanker rates, impacting end-user industries,” it projected.

ICRA expects crude prices to average between $70-80 per barrel for FY26.

Domestic prices

Additionally, the ratings firm said that domestic gas prices and LNG contracts with crude oil linked pricing will witness an uptick as crude oil prices firm up.

In India, APM gas prices had fallen below the ceiling price in June 2025 for the first time since April 2023, when the Kirit Parikh Committee’s recommendations were implemented as crude oil prices had softened amid tariff tensions and increase in output announced by the OPEC+ nations, it added.

“Given the sharp rise in crude oil prices, the APM gas price is likely to revert to $6.75 per million British thermal units (mBtu) while the NWG price is expected to rise by around 10 per cent in July 2025, if the crude oil prices sustain at current levels. With mounting tensions resulting in disruption in LNG transit from Qatar, spot LNG prices would rise sharply,” ICRA anticipated.

Domestic natural gas price for June 2025 has been fixed at $6.41 per mBtu on Gross Calorific Value (GCV) basis. APM gas price is at $6.41 per mBtu.

A sustained flare-up in the conflict poses upside risks for our estimates of crude oil prices, and consequently of net oil imports and current account deficit (CAD). A $10 per barrel increase in the average price of crude oil for the fiscal will typically push up net oil imports by around $13-14 billion during the year, enlarging the CAD by 0.3 per cent of GDP, it said.

“If the price persists at the current levels, it may not lead to a material revision in our GDP growth forecast, which is currently pegged at 6.2 per cent for the fiscal. However, a sustained rise from the current levels would weigh on India Inc.’s profitability and the extended uncertainty may further delay private capex, which could result in a downward revision in our GDP growth projections for the H2 FY26,” ICRA added.

Price impact

While elevated crude prices will boost profitability of Indian upstream players, the marketing margins of downstream companies is expected to be impacted.

On impact, ICRA said that LPG under-recoveries for Indian downstream players to expand by ₹16,000 crore from FY25 levels.

Besides, marketing margins for Indian downstream companies to moderate to ₹6-8 per litre for diesel and petrol. The profit before tax (PBT) of Indian upstream players to moderate by ₹6,800 crore from that in FY25, it added.

Published on June 19, 2025