Impact Assessment of US/Israel-Iran Conflict

Crude Oil Market Update

The US and Iran have reached an interim framework agreement aimed at ending immediate hostilities and creating a pathway for broader negotiations. The agreement is not a final comprehensive treaty but rather a temporary arrangement designed to stabilize the situation and provide a 60-day period for diplomatic discussions on unresolved issues. Both sides have confirmed the agreement, with formal signing expected around 19^th Jun’26, in Switzerland.

Core Agreed Elements

• The agreement calls for an immediate cessation of military operations and hostile activities on all fronts, including Lebanon. The ceasefire extends the existing truce for an initial period of 60 days and may be extended further through mutual consent. The objective is to prevent further escalation and create conditions conducive to diplomacy.
• The Strait of Hormuz will be reopened to international commercial shipping. Iran has committed to clearing naval mines and restoring safe navigation through the waterway. Both sides aim to return shipping traffic to pre-conflict levels within approximately 30 days. While US officials have described access as toll-free, Iranian authorities maintain that environmental and maritime traffic management fees may still be collected. Iran retains sovereignty and control over the Strait.
• The US will lift its naval blockade of Iranian ports, allowing normal maritime access and facilitating the resumption of international trade and commercial shipping activities involving Iran.
• The agreement does not resolve the most contentious nuclear issues. Instead, these matters will be addressed during the 60-day negotiation period. Iran has reaffirmed its commitment in principle not to pursue nuclear weapons and has agreed to discuss the future of its enriched uranium stockpile. Specific arrangements concerning uranium removal or reduction, enrichment limits, international inspections, and the potential dismantlement of nuclear facilities remain subject to future negotiations.
• The framework provides for limited and temporary sanctions relief, particularly regarding Iranian oil exports. Discussions will also begin regarding the release of certain frozen Iranian assets. Any broader or permanent sanctions relief will be tied to compliance with future agreements and performance benchmarks established during subsequent negotiations.

Production/Supply Recovery

• A tentative US-Iran framework agreement to end the conflict and reopen the Strait of Hormuz has eased immediate concerns over global energy supplies, sending oil prices lower.
• However, industry experts caution that restoring oil and gas production, refining operations, and shipping flows will take considerable time, with some oil output returning within weeks but full recovery potentially requiring months or years.
• More than 14 MBpd of oil production and significant refining and LNG capacity were disrupted during the conflict, while global oil inventories have fallen sharply.
• Market grapevines expect a gradual recovery, ongoing repair costs running into tens of billions of dollars, and a prolonged period of inventory rebuilding as countries seek to strengthen energy security against future geopolitical risks.
• Although the US and Iran have reached a preliminary agreement to reopen the Strait of Hormuz, maritime security experts warn that normal shipping operations may not resume for 40–50 days due to the need to detect and clear potential naval mines.
• Shipping companies, insurers, and oil traders remain cautious, as even a single mine poses a serious threat to vessels carrying cargoes worth hundreds of millions of dollars.
• Traffic through the strait remains far below pre-war levels, and uncertainty over the extent of Iran's mine deployments continues to hinder confidence. While international naval forces have begun preparations for mine-clearing operations, industry officials say restoring full safety and normal shipping volumes could take weeks or even months, prolonging disruptions to global energy supplies and trade.

War Impact on Crude Oil & Gasoil/Diesel Prices

War Impact on Gasoline, ATF & Natural Gas Prices

Strategic Petroleum Release

Key Supply Infrastructure

GCC Bypass Pipelines Running Near Capacity — But Shah Gas Field Ablaze and Fujairah Zone Struck

• Saudi Arabia's East-West pipeline is pumping oil at its full capacity of 7 MBpd, bypassing the Strait of Hormuz. Crude oil exports from Yanbu port have reached 5 MBpd, and the country is also exporting 0.70 to 0.90 MBpd of oil products.
• Of approximately 15 MBpd of crude transiting the Strait of Hormuz in OND'25, combined SPR releases and bypass pipeline capacity can offset roughly two-thirds — or slightly more — for the next 20 to 30 days, providing the Trump administration a window to assess strategic direction.
• New strikes directly threaten this buffer — Iranian drones struck the UAE's Shah gas field (currently ablaze) and the Fujairah Oil Industry Zone on Mar 17. A tanker was also hit near the Strait of Hormuz. Saudi Arabia intercepted over a dozen drones; Kuwait and Bahrain sustained additional attacks. These represent the first direct strikes on GCC energy export infrastructure since the conflict began.

Supply Analysis


Supply & Demand Analysis

War Scenarios Point to Global Supply Deficit of 1.35–1.90 MBpd in 2026 and AMJ Quarter Most Severe with a deficit of 3.00 - 4.50 MBpd.

Pre-war, global supply and demand were near-balanced with a modest surplus of +0.55 MBpd projected for 2026. Both conflict scenarios introduce significant supply deficits driven by Strait of Hormuz disruptions and impacts on Iraq and Kuwait crude production.

• Scenario 1 (Preferred): Ceasefire talks to remain on a progressive note and flows through the Strait of Hormuz improving over the coming weeks; however crude oil production losses will be there due to further non-availability of storage on on-shore in Iraq, Kuwait and other small Middle East nations.
• Scenario 2 (Alternate): No major deal being achieved from ceasefire talks and post completion of ceasefire talks, tensions continuing to remain in the Middle East and flows through the Strait of Hormuz continuing to remain restrained. Crude Oil Production Facilities & Refining Centers in the Middle East region getting affected and trade disruptions in Strait of Hormuz will be there for medium to long term (4 to 7 months).

Price Outlook

Brent Crude 1M Futures are expected to trade in a range of 100 USD/bbl to 125 USD/bbl over the coming 1 to 2 weeks. The coordinated SPR release and GCC bypass capacity provide a meaningful supply cushion that limits sustained upside beyond these levels.

Metals & Energy Market Update – Geopolitical Context (Iran Conflict)

Geopolitical backdrop:

Israel and Iran traded the worst exchange of fire since the April truce, with Iran firing missiles at Israeli targets and Israel carrying out strikes on western and central Iran. Brent bounced back strongly as renewed tensions stoked fresh supply fears and Hormuz near-closure continues to put a structural floor under prices. Equities saw sharp selloff in Asia at the open as well, with Kospi down by 14%, Nikkei down by 1.31% and Nifty down by 1.2%, S&P down by 2.64%, and Nasdaq registered a heavy sell-off and marked a 4.18% loss. Higher energy, slower growth, and limited room for rate cuts keep yields elevated. Safe-haven flows are rotating into money markets and short-duration paper.

Steel:

• Domestic steel prices have moderated from recent highs.
• Steel supply chains remain largely insulated from the Middle East conflict.
• Since, the start of war steel HRC prices are up by 8.7%.

Base metals:

• Copper ended last week down by 1%, primarily due to stronger dollar and weak demand.
• Aluminum rose by 18.3% since start of war linked to Gulf region supply disruptions. However, demand softness now driving price action.
• IMF downgraded 2026 global growth to 3.1% (from 3.3% earlier and 3.4% in 2025), highlighting war-related downside risks.

Precious metals:

• Volatility has eased, but prices face upward pressure, due to improving market sentiment in peace talks.
• However, any esclation and halt in a resolution will pressure on Precious Metals.
• Stronger U.S. yields and weak industrial offtake—especially auto—are suppressing any upside momentum.

LPG Market Update

LPG Market Update - 09 June 2026

• India’s LPG market saw another upward revision on 1st June 2026 , with oil marketing companies increasing commercial cylinder prices. Commercial LPG prices were raised across major cities, with the 19 kg cylinder in Delhi increasing by Rs 42 to Rs 3,113.50. Similar hikes were reported nationwide, ranging from Rs 42 to Rs 53.50 per cylinder.
  India’s domestic LPG market witnessed a price revision on 7 June 2026, with Oil Marketing Companies (OMCs) increasing the price of the 14.2 kg domestic LPG cylinder by ₹29 per cylinder across the country.
• In addition to commercial cylinders, oil marketing companies also increased the price of 5 kg Free Trade LPG (FTL) cylinders by Rs 11. Following the revision, the retail price of a 5 kg FTL cylinder in Delhi now stands at Rs 821.50. FTL cylinders are sold outside the subsidized domestic LPG system and are commonly used by migrant workers, temporary households, street vendors, and consumers requiring smaller LPG packs.