Dark clouds of war over global economy, markets. Brace for extended uncertainty.
₹1 change in gross marketing margin substantially impacts the Ebitda (earnings before interest, taxes, depreciation, and amortization) margins of oil PSUs by over 20%. Increased LNG prices or supply shortages would adversely affect gas companies like GAIL, Petronet LNG, and city gas distributors such as Gujarat Gas, IGL, and Mahanagar Gas. Additionally, the windfall tax limits profit margins for producers like ONGC and OIL, capping net realizations at around $75 per barrel.
Moreover, high energy prices could drive inflation and put pressure on the rupee as the current account deficit widens. Budgetary forecasts might need adjustment due to a potential rise in fiscal deficit if the conflict prolongs. As this situation develops, three main scenarios emerge: First, the conflict could escalate further, pulling in more nations.
Second, there might be mediation efforts leading to de-escalation. The third scenario, which appears most likely, involves the conflict dragging on indefinitely without major escalation but also without any resolution of tensions. This protracted situation is probable because few nations maintain favourable relationships with both Israel and Iran to serve as effective mediators.
Countries like Russia and China maintain strong ties with Iran but do not share a similar relationship with Israel. Conversely, the US and UK are well-aligned with Israel but have strained relations with Iran. India stands out as one of the few countries with amicable relations with both, yet the focus on upcoming general elections limits the government's capacity to intervene in this complex dispute.
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