Post 28th Feb’26, the US-Israel joint attacks on Iran and the subsequent developments, Crude oil prices surged by around 65% to 119.50 USD/bbl on 09th Mar’26 (in intraday) from 27th Feb’26 closing pricing price of 72.48 USD/bbl. Meanwhile, in OND’25, we advised our customers to hedge around the lows of 60.09 USD/bbl for JFM’26 & AMJ’26 quarters. A detailed description of those hedge strategies is mentioned in the section below.
Leveraging Market Outlook: The Strategic Advantage of Early Booking
ICE Brent Crude Oil prices have entered a long-term bearish phase from the Mar’22 high of 139.12 USD/bbl. From the Elliott wave viewpoint, the Primary-wave-3 concluded near this high (139.12 USD/bbl) and subsequently entered a Primary-wave-4, which is unfolding into a W-X-Y corrective pattern. Currently, prices are unfolding in Intermediate-wave-[Y]. Hence, prices are likely to stay above the support of 60 USD/bbl from here and bounce higher towards 76 USD/bbl by May’26, ahead of mixed price action.
TransGraph (TG) follows a time-tested hedge framework designed to help corporate companies manage commodity price risk in a structured and disciplined manner. The framework classifies hedging strategies into three broad categories: Compulsory Hedging based on approved budgets, View-Based Hedging driven by market forecasts, and timing support for hedge and de-hedge decisions using structured hedge models. By combining policy-based hedging with market intelligence, TG assists corporates in aligning procurement decisions with prevailing and anticipated market conditions. This systematic approach helps companies manage exposure to commodity prices volatility rather than reacting to short-term market fluctuations.
| AMJ 2026 | ||||||
| Brent Crude Oil (USD/BBL) | Remaining Qty | 200000 | Unit M2M | 22.78 | Unit Profit Booked | 0.00 |
| M2M (in million dollars) | 4.56 | Booked Profit (in million dollars) | 0.00 | |||
| Exposure (in Barrels) | Contract Month | Buy Qty | Avg. Buy Price | CMP | Sell Qty | Avg. Sell Price |
| 400000 | Jul-26 | 200000 | 60.10 | 82.88 | 0 | 0.00 |
| Max Hedge | Buy Date | Qty | Buy Price | Sell Date | Qty | Sell Price |
| 50% | 15-Dec-25 | 120000 | 60.30 | |||
| 19-Dec-25 | 80000 | 59.80 |
Implementing such risk management practices offers several advantages for corporates. It helps stabilize procurement costs, improves adherence to budgets, and protects companies from adverse price movements in volatile markets. Structured hedging also enhances decision-making by integrating market research, technical indicators, and macroeconomic insights into procurement strategies. As a result, organizations benefit from better cash flow planning, improved margin protection, and more efficient procurement mechanisms, ultimately strengthening overall financial stability and operational planning.
The following table illustrates the hedging 50% under the Compulsory Hedging category, for JFM’26 and AMJ’26 quarters and the financial stability thereof,
| JFM 2026 | As on | 3/9/2026 | ||||
| Brent Crude Oil (USD/BBL) | Remaining Qty | 0 | Unit M2M | 0.00 | Unit Profit Booked | 15.19 |
| M2M (in million dollars) | 0.00 | Booked Profit (in million dollars) | 3.04 | |||
| Exposure (in Barrels) | Contract Month | Buy Qty | Avg. Buy Price | CMP | Sell Qty | Avg. Sell Price |
| 400000 | Apr-26 | 200000 | 60.09 | 0.00 | 200000 | 75.28 |
| Max Hedge | Buy Date | Qty | Buy Price | Sell Date | Qty | Sell Price |
| 50% | 15-Dec-25 | 120000 | 60.17 | 23-Feb-26 | 80000 | 71.50 |
| 19-Dec-25 | 80000 | 59.97 | 2-Mar-26 | 120000 | 77.80 |
Based on JFM 2026 market outlook, a hedging strategy was implemented to manage price exposure for 400,000 barrels of Brent crude oil, with a maximum hedge level of 50%. In Dec’25, 200,000 barrels were hedged through purchases: 120,000 barrels at 60.17 USD/bbl and 80,000 barrels at 59.97 USD/bbl, resulting in an average buy price of 60.09 USD/bbl. As market prices increased, the positions were unwound through sales of 80,000 barrels at 71.50 USD/bbl on 23rd Feb’26 and 120,000 barrels at 77.80 USD/bbl on 02nd Mar’26. This resulted in an average selling price of 75.28 USD/bbl, generating a unit profit of 15.19 USD and an overall realized profit of approximately 3.04 million USD.
For AMJ 2026, a hedging strategy was used to manage price exposure of 400,000 barrels of Brent crude oil, with a maximum hedge level of 50%. In Dec’25, 200,000 barrels were hedged by purchasing 120,000 barrels at 60.30 USD/bbl and 80,000 barrels at 59.80 USD/bbl, averaging 60.10 USD/bbl. As of 09th Mar’26, these hedge positions remain open, with a current market price of 82.88 USD/bbl. The mark-to-market (M2M) profit on the open hedge is approximately 4.56 million USD, reflecting the unrealized gain from the price increase, while no realized profit has been made yet.
Crude Oil Market Developments and Current S&D Balance
Crude oil prices rose sharply higher over the last one week, amid anticipation of Crude Oil & its products trade getting affected through the Strait of Hormuz (from where Saudi Arabia, Iraq, the UAE & Kuwait crude oil & its products exports pass through) and the Red Sea for a medium to long term. Around 20 MBpd trade of Crude oil & its products happened through the Strait of Hormuz in OND’25 (of which close to 15 MBpd trade is Crude oil & Condensates only). The threat of closing the Strait of Hormuz for medium to long term, a critical passage for around 20% of global Crude oil & its products flows has long been a strategic deterrent against Western pressure, which has intensified following the recent US-Israel joint attacks on Iran.
Limited pipeline bypasses exist but cannot replace the strait at scale. Saudi Arabia’s East–West (Petroline) crude oil pipeline runs from the Persian Gulf across the Arabian Peninsula to the Red Sea port of Yanbu and can move up to about 7.0 MBpd. The UAE’s Habshan–Fujairah pipeline bypasses Hormuz by linking Abu Dhabi’s onshore fields directly to the Gulf of Oman, with roughly 1.5–1.8 MBpd capacity. Together these alternatives might divert around 8.5–8.8 MBpd of exports, a fraction of the 20 MBpd normally transiting Hormuz.
Meanwhile, Iraq (barring Kirkuk-Ceyhan pipeline of around 0.3 MBpd capacity) and Kuwait do not have any major pipelines or other transport routes for bypassing the Strait of Hormuz and limited storage facilities are there domestically. Market grapevine indicates that Iraq (Feb’26 production: 4.2 MBpd) & Kuwait (Feb’26 production: 2.6 MBpd) cannot maintain current production rates beyond 2 to 3 weeks from the start of conflict date and have to reduce the crude oil production rates gradually which is going to have a severe impact on Crude oil markets during AMJ’26 & JAS’26 resulting in deficit conditions of around 4.5 MBpd & 2.0 MBpd respectively.
Strategic Petroleum Reserves (SPR) Availability
- US: Holds about 854.7 million barrels (mln bbl) of crude stocks (including 415.4 mln bbl SPR and 439.3 mln bbl commercial reserves). With the US importing only 0.68 MBpd through the Strait of Hormuz, the reserves provide a very strong buffer against disruptions.
- Japan: Maintains about 438 mln bbl of strategic reserves, covering roughly 184 days of crude imports, including government, private, and joint storage stocks.
- Germany: Holds around 145 mln bbl of emergency oil stocks, enough to cover about 70 days of domestic consumption.
- France: Maintains around 122 mln bbl of reserves, covering about 91.5 days of consumption, largely through industry stockholding mandates.
- Italy: Maintains emergency oil stocks equivalent to over 90 days of consumption, mainly managed through industry-held reserves.
- Canada: Does not maintain a formal SPR, relying instead on commercial inventories that provide about 50–60 days of supply buffer.
- UK: Holds emergency stocks covering roughly 85–90 days of consumption, primarily through industry-managed reserves rather than government-held stockpiles.
- China: Market grapevine indicates that China holds about 1,000 mln bbl of SPR and imports around 5.1 MBpd of crude through the Strait of Hormuz.
- India: Market grapevine indicates that India holds about 45 mln bbl of SPR and imports around 2.5 MBpd to 2.7 MBpd of crude through the Strait of Hormuz.
Details of previous releases of SPR by International Energy Agency (IEA)
- 1991: First Gulf War – 75 mln bbl
- 2005: Hurricanes Katrina & Rita – 60 mln bbl
- 2011: Libya Civil War – 60 mln bbl
- 2022: Russia-Ukraine War – 180 mln bbl in two tranches
Moving ahead, based on the current geopolitical developments in the Middle East region and possible release of SPR by G7 nations and other IEA members, below mentioned Crude oil S&D scenarios are developed
| Pre-War Scenario | Scenario 1 (Preferred) | Scenario 2 (Alternate) | |||||||||||
| Global Supply | Global Demand | S&D Balance | Global Supply | Global Demand | S&D Balance | Global Supply | Global Demand | S&D Balance | |||||
| 2025e | 103.57 | 102.94 | 0.63 | 103.57 | 102.94 | 0.63 | 103.57 | 102.94 | 0.63 | ||||
| 2026p | Know more | Know more | Know more | Know more | Know more | Know more | Know more | Know more | Know more | ||||
Price Outlook Summary
Scenario 1 (Preferred): ICE Brent Crude Oil 1M Futures prices are likely to trade with high volatility in the range of X0 USD/bbl to XXX USD/bbl in the forthcoming weeks from here and consolidating in that range. Meanwhile, based on market & war developments, prices can spike towards the levels of XXX USD/bbl here & there.
In an extreme escalation of war situation in Iran like Ground Invasion coming from the US & Israel (along with possible military support from Saudi Arabia & Pakistan) can result in Brent crude prices reaching towards fresh record high levels and crossing XXX USD/bbl. Currently, there is less probability (around 20%) for this scenario to unfold.
Global & India LPG Market Developments
Global benchmark LPG prices have increased sharply over the past week, with LPG In Well Mont Belvieu Enterprise (non-TET) 50:50 Propane-Butane prices rising by 23% to USD 431/ton by the end of last week. The rise is largely due to escalating geopolitical tensions in the Middle East, particularly shipping disruptions around the Strait of Hormuz following the USA–Israel joint strikes on Iran that began on 28 Feb’26, which have also pushed Brent crude oil prices higher by nearly 26%.
This development is especially significant for India’s LPG market, as the country consumes approximately 33 MMT annually and relies on imports for around 60–65% of its LPG demand. Nearly 90% of these imports originate from the Middle East, with most shipments passing through the Strait of Hormuz.
Looking ahead, continued geopolitical tensions and potential escalation in the region could further disrupt shipping routes and tighten LPG supply chains. This may lead to higher freight costs, elevated insurance premiums, and continued volatility in benchmark LPG prices, potentially keeping landed LPG costs for Indian buyers under upward pressure in the near term.
Macro Economy Analysis Impact
The ongoing geopolitical tensions in the Middle East, particularly the escalating conflict involving Iran, Israel, and the U.S., have raised concerns about global supply chains and prices. The potential disruption of key shipping routes, including the Strait of Hormuz, and higher energy costs could exert inflationary pressure on the global economy, leading to slowing global growth and a rise in interest rates and borrowing costs, exacerbating the global public debt crisis.
USDINR – Escalating conflict, negative risk appetite, higher import costs – All points to a weaker Rupee
In response to the heightened tensions in the Middle East region & rise in geopolitical uncertainty, safe-haven assets, including the US Dollar and Precious Metals, saw substantial gains, while emerging market currencies and equity markets experienced downward pressure.
On the domestic front, India’s high reliance on energy imports leaves it vulnerable to external shocks, particularly considering rising global oil prices. Approximately 60% of natural gas and 45-50% of crude oil imports pass through the Strait of Hormuz, heightening the risk from regional instability. In FY’25, Russia accounted for 36% of India’s crude oil supply, offering some partial mitigation. Energy imports typically make up 27% of India’s total import bill, and a USD 10 increase in oil prices could expand the current account deficit (CAD) by USD 18-20 billion, or 0.5% of GDP. This, coupled with higher freight and insurance premiums, further exacerbates the economic impact beyond just the price of oil. India receives the largest remittance in the world, around 120 billion per annum, with approximately 1/3rd coming from the Gulf region and prolonged economic slowdown can lead to slowing inflows. Following the outbreak of conflict, the USD/INR exchange rate broke 91, with Indian Rupee likely to remain under pressure in the short term and can move up to 94 on any escalation.
Gold – Safe haven support even as Industrial demand destruction and higher yields to limit the rise
The escalating war in Middle East and the US–Israel strikes on Iranian targets and retaliatory disruptions around the Strait of Hormuz, has triggered sharp volatility in gold and silver prices. Gold briefly surged to USD ~5400 per ounce before retracing toward USD 5100 per ounce as dollar strength and profit-taking emerged, while silver swung from USD 95 per ounce to USD 79 per ounce before stabilizing.
Gold is likely to remain high but volatile in the next few months as the Middle East conflict fuels safe-haven demand, though gains could be capped by a stronger U.S. dollar and higher interest-rate expectations. Gold prices could retest USD X,X00/oz or approach record highs if geopolitical tensions escalate, but short-term pullbacks may occur if inflation and rising yields strengthen the dollar, with any downside limited to USD XX00 per ounce. Silver prices are projected to trade in the range of USD XX to XX per ounce.
Key Takeaways
- Crude oil prices surged ~65% from $72.48/bbl on 27 Feb’26 to $119.50/bbl intraday on 09 Mar’26, following the US-Israel joint strikes on Iran beginning 28 Feb’26.
- Strait of Hormuz disruption is the central risk — around 20 MBpd of crude oil and products flow through it, with limited pipeline bypass capacity of only ~8.5–8.8 MBpd combined for Saudi Arabia and UAE. Iraq and Kuwait have virtually no alternatives and face production sustainability issues within 2–3 weeks.
- India faces compounded vulnerability — ~60% of natural gas and 45–50% of crude oil imports pass through the Strait of Hormuz. A $10/bbl oil price rise alone could widen India’s current account deficit by $18–20 billion (0.5% of GDP), with freight and insurance costs adding further pressure. USD/INR has already broken 91.
- LPG markets under acute pressure — Global LPG benchmark prices rose 23% in a week. India, which imports 60–65% of its ~33 MMT annual LPG demand with 90% sourced from the Middle East, is directly exposed to this supply shock.
- Early hedging proved strategically valuable — Positions taken in Dec’25 near lows of ~$60/bbl generated ~$3.04M in realized profit for JFM’26 and ~$4.56M in unrealized M2M gains for AMJ’26, demonstrating the power of structured, proactive risk management.
- Safe-haven assets rallied sharply — Gold surged to ~$5,400/oz before retracing; silver swung from $95 to $79/oz. The US Dollar also strengthened, putting further pressure on emerging market currencies and equity markets.
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