Global energy markets may not return to pre-conflict stability anytime soon. Crude oil and liquefied natural gas (LNG) prices could remain 15–25% higher than earlier levels even if tensions in West Asia ease, according to a CLSA report. The brokerage said the conflict has altered the demand-supply balance for the coming quarters.
Energy prices have surged since disruptions began across key shipping routes such as the Strait of Hormuz. Supply chain stress, rising freight costs, and uncertainty over production timelines have added to volatility. These factors continue to shape market expectations.
CLSA reported that the resumption of oil output in some parts of the Gulf region might take a few months to begin. Some of the wells might experience permanent losses, which might impact the supply of crude oil. Even though tensions between nations might ease, the drop in prices might not be sustained for a long period.
The LNG industry is expected to experience a delayed recovery as well. Forecasts of a global surplus in gas supplies by the end of 2026 might be delayed to 2027 as setbacks in the expansion of new capacity and outages at major plants have delayed the recovery of the industry. The Ras Laffan complex, which is operated by Qatar and accounts for a large portion of global LNG supplies, has also experienced the impact of the crisis.
The situation may have a differential impact on various segments in India’s energy sector. Companies operating in the upstream segment and engaged in exploration and production activities may benefit from a rise in crude prices. Oil marketing companies may see their margins being eroded if they continue to maintain prices at existing levels even though costs may rise further.
Gas distribution and LNG import segments may also see investor sentiment being low in the near term. Overall, the report suggests that the energy sector may see a more challenging scenario in the near term. High prices, reduced supplies, and geopolitical situations may continue to impact India’s energy sector in the near term.