Despite marketing margins for MS (petrol) and HSD (diesel) remaining healthy over a large part of FY2026, the escalation of the ongoing conflict in West Asia has led to sharp crude price spikes and trade disruptions, resulting in a steep deterioration in marketing margins, with the segment turning loss-making. The war-induced volatility and elevated crude prices have emerged as a key downside risk for OMCs, and sustained geopolitical tensions could continue to weigh on marketing profitability into FY2027.

Brent has recently spiked to more than $100/bbl, driven by severe disruptions around the Strait of Hormuz (SoH) and elevated geopolitical risk premium. While the International Energy Agency (IEA) has announced release of strategic reserves by its member countries and the US has allowed purchase of Russian crude oil, these measures offer limited relief given that 20% of global petroleum liquids passing through the SoH is impacted.

Marketing margins of oil marketing companies (OMCs) have turned negative amid crude price increases during the ongoing war, weighing on profitability. While margins remained healthy in YTDFY2026, supported by stable crude oil prices until February 2026, profitability is expected to moderate if the conflict extends and crude prices remain elevated