These oil and gas stocks could be impacted due to the US-Iran war, as per Citi

Brokerage firm Citi has warned on Wednesday, March 4, that India’s gas value chain could be at a greater near-term risk due to the ongoing US-Iran war, that has resulted in a spike in oil and gas prices.Qatar Energy, one of the largest LNG producers in the world, has announced the stoppage of production, not just for LNG but also for other materials due to the war. As a result, it has invoked the Force Majeure clause to offtakers like Petronet LNG, which in turn has issued the same to its own offtakers, GAIL, Indian Oil, and BPCL.

According to Citi, Qatar, over the last few years, has been supplying nearly 40% to 50% of India’s LNG imports, which could be very difficult to entirely replace, given the surge seen in global gas prices.
Here are the stocks that could be impacted due to these developments:Citi believes that Petronet LNG could face elevated volumes risk as Qatar LNG constitutes nearly 50% of its overall volumes.

For GAILCiti said that while its gas transmission volumes could be at risk, there are partial offsets from portfolio diversification, potentially higher gas trading margins, and likely gains in the LPG and the petchem business.Among the City gas players, Gujarat Gas could be at a higher risk as it has a high dependence on both Qatar and spot LNG. Sources have also told CNBC-TV18 that Gujarat Gas has cut 50% of its gas supply to the industrial sector. The company has around 70% gas imports in its raw material basket, mostly from Qatar.

For oil companies, upstream players like ONGC will benefit from higher prices, assuming no re-imposition of windfall tax, according to Citi, who also sees margin headwinds for oil marketing companies such as HPCL, BPCL and IOC.

Citi also believes that Reliance Industries could benefit in the Oil-to-Chemicals business due to the strength in its refining margins, particularly diesel.

Shares of IOC, Petronet, HPCL, BPCL, GAIL, all declined between 3% to 4% on Monday. They will remain in focus today as well, with Brent Crude having crossed the mark of $82 per barrel.

(With Inputs From Sonal Bhutra)