Rising geopolitical tensions around the Strait of Hormuz, a key global energy transit route, are tightening refining and petrochemical markets, pushing up fuel margins and commodity prices. Analysts say the disruption could support earnings for energy companies such as Reliance Industries if supply constraints persist.
The Strait of Hormuz handles around 20% of global crude oil and condensate flows, equivalent to roughly 20–21 million barrels per day, along with about 20% of global liquefied natural gas (LNG) trade. Recent disruptions in the region, combined with refining outages and trade restrictions, have begun to significantly affect global energy supply chains.
According to market data, around 3–4 million barrels per day of refining capacity has been disrupted globally. At the same time, China’s restrictions on refined fuel exports and a surge in crude oil freight rates to decade-high levels have tightened product availability in international markets.
As a result, refining margins have surged sharply in March 2026. Gasoil, gasoline and jet fuel cracks have risen to around $42, $16 and $58 per barrel, respectively. These levels are 147%, 40% and 124% higher than long-term averages, reflecting strong demand alongside constrained supply.
Petrochemical markets have also reacted to the supply shock. Prices for polyethylene (PE) and paraxylene (PX) have climbed 10–15% month-on-month so far in March. Analysts say that even if geopolitical tensions ease, supply chains may take longer to normalise, which could keep refining margins elevated in the near term.
For Reliance Industries, which operates one of the world’s largest refining and petrochemical complexes, the situation could translate into stronger profitability. Analysts estimate that if refining margins remain above historical averages through the first half of FY2027, the company’s oil-to-chemicals (O2C) segment EBITDA could rise by around ₹170 billion.
Such an increase would imply roughly an 8.5% upside to FY2027 consolidated EBITDA forecasts. Petrochemical margins may also benefit, as higher product prices offset feedstock costs. Reliance’s diversified feedstock mix — with only about 30% linked to naphtha — could help cushion the impact of rising crude prices.
However, analysts warn that potential government export duties on fuels, similar to those introduced in July 2022, could limit the upside by reducing refining margins.
Despite these risks, analysts maintain a positive outlook for the company, reiterating a “buy” rating and a target price of ₹1,750 per share, citing strong integrated energy operations and diversified business segments.
