US-Iran Peace Deal: These Oil & Gas Stocks Could Be the Biggest Winners

The recently announced US-Iran peace deal has sparked optimism across global energy markets, with analysts expecting a gradual easing of supply disruptions and a sustained decline in crude oil prices. The agreement is expected to facilitate the reopening of the Strait of Hormuz, a strategic shipping route that handles nearly one-fifth of global oil and gas trade. As geopolitical tensions ease, the risk premium that had pushed crude oil prices sharply higher earlier this year is beginning to unwind.

Brent crude prices have already slipped below $83 per barrel after touching levels above $120 per barrel during the peak of the Middle East conflict. Market participants now expect further downside in oil prices if the peace agreement remains intact and sanctions on Iranian oil exports are gradually relaxed. According to Nomura, a combination of additional Iranian crude supplies, improving shipping conditions, and higher production from OPEC+ members could potentially push oil prices below $70 per barrel over the coming months.

For India's oil and gas sector, the implications are significant. While lower crude prices are expected to boost profitability for oil marketing companies, city gas distributors, and LNG importers, upstream oil producers could face earnings pressure due to lower realizations.

Why Lower Crude Oil Prices Matter for India

India imports more than 85% of its crude oil requirements, making it highly sensitive to global energy prices. Lower crude prices reduce input costs for refiners and fuel retailers, improve margins for gas distributors, and lower energy costs for industries and consumers.

A sustained decline in oil prices can also ease inflationary pressures, reduce the country's import bill, improve fiscal balances, and support economic growth. However, companies involved in crude oil exploration and production generally face lower revenues when oil prices decline, creating a clear distinction between potential winners and losers within the energy sector.

BPCL and IOC Emerge as Major Beneficiaries

Among the biggest beneficiaries of the changing oil price environment are likely to be Bharat Petroleum Corporation Limited (BPCL) and Indian Oil Corporation (IOC). Both companies operate large refining and fuel marketing businesses that typically perform better when crude oil prices remain stable or move lower.

Lower crude costs improve marketing margins, reduce inventory losses, and strengthen overall profitability. In addition, softer oil prices can support fuel consumption growth across transportation and industrial segments. Nomura maintains a positive outlook on both companies, highlighting their ability to benefit from improved refining economics and stronger retail fuel margins. The brokerage has assigned a Buy rating to BPCL with a target price of ₹365 and also remains constructive on IOC's earnings outlook.

HPCL Expected to Benefit, Though Upside May Be Moderate

Hindustan Petroleum Corporation Limited (HPCL) is also expected to gain from declining crude prices. Similar to its peers, the company could benefit from improved fuel marketing margins and lower working capital requirements.

However, analysts believe the magnitude of benefits may be relatively lower compared to BPCL and IOC due to differences in operational dynamics and current valuations. Nevertheless, HPCL remains well-positioned to capitalize on a more favorable crude oil environment if prices continue to trend lower over the coming quarters.

Petronet LNG Could See Strong Growth as LNG Prices Decline

One of the most significant beneficiaries of a lower crude price environment could be Petronet LNG, India's largest LNG importer.

Global LNG prices often move in line with crude oil trends. As oil prices decline, LNG procurement costs become more competitive, improving affordability for industrial users and power producers. Lower spot LNG prices could encourage higher imports, increase utilization at LNG terminals, and support stronger demand growth across key consuming sectors.

Nomura believes Petronet LNG stands to benefit from multiple triggers, including softer LNG prices, improved utilization of its expanded capacity, and stronger gas consumption. The brokerage maintains a Buy rating on the stock with a target price of ₹345.

Mahanagar Gas and Gujarat Gas Could Be Key Winners

The City Gas Distribution (CGD) segment is expected to be among the largest beneficiaries of lower oil and LNG prices.

For Mahanagar Gas (MGL), lower input gas costs could translate into significant margin expansion. The company supplies compressed natural gas (CNG) and piped natural gas (PNG) across key urban markets, and even a modest reduction in procurement costs can have a meaningful impact on profitability. Analysts believe MGL could be one of the biggest gainers if gas prices continue to soften.

Similarly, Gujarat Gas is expected to benefit from lower LNG prices and improved affordability of natural gas for industrial customers. Competitive gas pricing can encourage greater industrial adoption, supporting volume growth while simultaneously improving operating margins. Nomura remains positive on both companies and views them as attractive beneficiaries of the evolving energy landscape.

GAIL Could See Mixed But Positive Impact

The outlook for GAIL India appears moderately positive, although the impact is likely to be more balanced compared to other gas-sector companies.

Lower energy prices and increased LNG imports could boost gas transmission volumes across GAIL's extensive pipeline network. Higher throughput generally supports revenue growth in its transmission business. However, declining LNG prices could also compress marketing margins, partially offsetting the benefits.

Despite these challenges, analysts believe higher gas consumption and increased pipeline utilization could provide meaningful support to GAIL's long-term earnings profile.

Reliance Industries Faces a Mixed Outlook

For Reliance Industries (RIL), the impact of the US-Iran peace deal is expected to be more nuanced.

On one hand, lower crude oil prices and the return of additional Middle East refining capacity could put pressure on refining gross margins (GRMs), affecting profitability in Reliance's refining business. Increased regional fuel supply often results in lower refining spreads, which can impact earnings.

On the other hand, lower feedstock costs and improved availability of gas and petrochemical inputs could benefit the company's petrochemical operations. Furthermore, Reliance's diversified business portfolio, which includes telecom, retail, digital services, and consumer businesses, reduces its dependence on refining profitability alone.

As a result, analysts view the overall impact on Reliance as moderately negative in the short term but manageable given the company's diversified earnings base.

ONGC and Oil India Could Face the Biggest Challenges

While downstream and gas-focused companies stand to benefit from lower energy prices, upstream producers are likely to face significant headwinds.

Oil and Natural Gas Corporation (ONGC) derives a substantial portion of its earnings from crude oil and natural gas production. Lower oil prices directly reduce realizations, impacting revenues, profitability, and cash flows. If Brent crude continues to decline towards the $70 per barrel level, earnings expectations for ONGC could come under pressure.

A similar scenario applies to Oil India, which is heavily exposed to upstream exploration and production activities. The company generally benefits when oil prices remain elevated, but declining crude prices can negatively affect both revenue growth and profitability. As a result, analysts view ONGC and Oil India as the biggest potential losers from the ongoing normalization in global oil markets.

Winner vs Loser Table

Category	Stocks
Major Winners	BPCL, IOC, Petronet LNG, Mahanagar Gas, Gujarat Gas
Moderate Beneficiaries	HPCL, GAIL India
Mixed Impact	Reliance Industries
Potential Losers	ONGC, Oil India

What Investors Should Watch Next

The future trajectory of the oil and gas sector will largely depend on the successful implementation of the US-Iran peace agreement and the timeline for reopening the Strait of Hormuz. Investors should closely monitor Brent crude price movements, OPEC+ production decisions, developments related to Iranian sanctions, LNG pricing trends, and domestic fuel demand.

If oil prices continue to decline and global energy supplies normalize, downstream oil marketing companies, city gas distributors, and LNG importers are likely to remain the biggest beneficiaries. Conversely, upstream oil producers may continue to face earnings pressure due to lower crude realizations.

Key Takeaways

• US-Iran peace deal could accelerate the decline in crude oil prices and improve global energy supplies.
• BPCL, IOC, Petronet LNG, Mahanagar Gas, and Gujarat Gas are expected to be the biggest beneficiaries.
• GAIL could benefit from higher gas transmission volumes despite some pressure on marketing margins.
• Reliance Industries may face weaker refining margins but could offset part of the impact through its diversified businesses.
• ONGC and Oil India are likely to face the greatest earnings pressure if oil prices continue to fall.
• The reopening of the Strait of Hormuz remains the most important near-term catalyst for the sector.

Why is the US-Iran peace deal important for oil prices?

The agreement reduces geopolitical risks and could increase global oil supplies, leading to lower crude oil prices and improved market stability.

Which Indian stocks are expected to benefit the most?

BPCL, IOC, Petronet LNG, Mahanagar Gas, and Gujarat Gas are among the biggest expected beneficiaries.

Why are ONGC and Oil India considered potential losers?

Lower crude oil prices reduce the realization value of oil and gas production, directly impacting earnings and profitability.

How does lower crude oil help city gas companies?

Lower gas procurement costs improve margins and make natural gas more affordable for industrial and retail consumers.

What is the outlook for Reliance Industries?

Reliance may face some pressure on refining margins, but its diversified business model helps reduce the overall impact.