Impact Assessment of US/Israel-Iran Conflict

Crude Oil Market Update

• Two crude tankers carrying nearly 2 million barrels of oil sailed through the Strait of Hormuz on 22nd Jun'26, indicating a rise in traffic following weaker flows on Sunday due to passage concerns. 
• The US authorised Iranian oil sales on Monday, easing decades-old sanctions as it pushes toward a final peace deal with Tehran. The general license allows the sale of Iranian crude oil and petrochemical and petroleum products through 21st Aug'26, and permits import into the US when necessary to complete their sale, delivery or offloading.
• Iran has committed to free and open transit in the Strait of Hormuz and to permit International Atomic Energy Agency inspectors into their country, in line with ongoing productive talks in Switzerland.
• The Strait of Hormuz saw a sharp drop in the number of ships passing through on Sunday after Iran announced it had closed the waterway again, citing Israeli and US violations of the interim peace deal. Shipping data showed five vessels passed the strait on 21st Jun'26 (Sunday), down from 26 the previous day.
• Iraq is preparing to export crude oil and naphtha through ports in Syria, after the Iran war cut off its main Gulf shipping routes. The move would continue even after the Iran war ends, as part of a government-approved strategy to reduce Iraq's reliance on a single export corridor.
• Syria plans to open two extra unloading areas and other facilities in Baniyas within a week to handle Iraqi crude oil and naphtha, and Iraqi fuel oil shipped via Syria had reached destinations across Africa and Europe.
• The US-Iran ceasefire resurfaced following US Vice President JD Vance's warning against further Israeli action in Lebanon, although expectations of a gradual restoration of oil flows through the Strait of Hormuz under the interim US-Iran agreement continued to support a broadly balanced market outlook.
• European gasoline exports to the US have weakened sharply, with May'26 shipments averaging 1.63 MBpd versus 1.9 MBpd a year earlier, while second-quarter exports are expected to average just 0.25 MBpd, the lowest seasonal level since 2020, as refinery closures, rising European demand, and disruptions linked to the Iran war tighten supplies.
• The global gasoline market is projected to face deficits of 1.0 MBpd in May'26 and 1.13 MBpd in Jun'26, while US gasoline inventories have fallen to 215 mln bbl, their lowest Jun'26 level since 2014, raising concerns about fuel availability during the peak summer driving season.

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:

The United States and Iran concluded their first round of high-level talks in Switzerland, agreeing on a roadmap to reach a final deal within 60 days, while technical negotiations will continue this week. The discussions took place amid renewed tensions over Iran's closure of the Strait of Hormuz and U.S. warnings of potential military action. According to a joint statement released by Qatar and Pakistan, the parties also agreed to establish mechanisms aimed at ensuring safe commercial navigation through the Strait of Hormuz and advancing efforts to end hostilities in Lebanon. Iranian Foreign Minister Abbas Araqchi stated that the discussions resulted in waivers for certain Iranian oil and petrochemical exports, the release of a portion of the country's frozen assets, and the initiation of a reconstruction and development framework for Iran. Despite ongoing uncertainties, the diplomatic progress is likely to ease immediate concerns over global energy supply disruptions and geopolitical risks.

While the Fed has kept interest rates unchanged, updated projections indicated an increased likelihood of a rate hike later this year, with Chair Kevin Warsh reaffirming the central bank's commitment to containing inflation. Higher Treasury yields and firm U.S. economic data continue to support the dollar.

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 0.5%, primarily due to FOMC outcome and expectations of rate cuts towards the end of the year.
• Aluminum rose by 7.7% since start of war linked to Gulf region supply disruptions. However, demand softness, possible peace deal, and macroeconomic sentiments are now driving price action.

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

• 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.