LPG-LNG Crisis: Gas crisis deepens in the country! Benefits to these companies including RIL, IOC – What should investors keep an eye on? – market

Morgan Stanley strategists Daniel Black and Jonathan Garner said in a report that the firm is currently adopting a defensive strategy. The brokerage has reduced India’s rating in its Asia portfolio from ‘overweight’ to ‘equalweight’.

According to analysts, the economies of Asia are highly dependent on energy supplies coming from the Middle East. In such a situation, if oil and LNG supply through the Strait of Hormuz is disrupted, it could have a major impact on the supply chain.

Morgan Stanley on India Energy

Which companies can benefit?

Reliance Industries, Indian Oil Corporation, Petronet LNG, and Hindustan Petroleum Corporation are expected to benefit.

India at risk due to interruption in LNG supply

According to the report, India is among those Asian countries which may be more affected by the possible interruption in the LNG supply coming from Qatar.

If energy prices increase, it may increase pressure on energy importing economies and may also impact the earnings of companies.

Morgan Stanley believes that due to high valuations and uncertainty regarding the Artificial Intelligence (AI) sector, global investors may adopt a wait-and-see attitude for now.

Government changed gas rules

Keeping in view the risks related to supply, the Government of India has decided on a new order of allocation of domestic natural gas. Under the new rules-

This change means that domestic gas supplies will be diverted to essential sectors, while petrochemical plants, power plants and other industries may get less gas.

Increasing risk on the Strait of Hormuz

Tension has increased in the region after the recent US-Israel attacks and Iran’s retaliation. Due to this, the movement of ships passing through the Strait of Hormuz has reduced and shipping insurance premiums have increased.

This waterway is very important for the world because about 20% of the total maritime oil trade passes through here. Apart from this, about one-third of the LNG shipment takes place through this route. This route is also important for India because a large part of the country’s LNG and LPG imports come through this route.

India’s gas consumption

Domestic production in India currently meets about half of the total natural gas consumption. The country’s total gas consumption is about 191 million standard cubic meters per day. If the tension in West Asia continues for a long time, it may increase the pressure on Asian economies and the risk of global economic recession, which may further increase the prices of oil and LNG.

Disclaimer: This article is for informational purposes only and should not be construed as investment advice in any way. ET NOW Swadesh recommends its readers and viewers to consult their financial advisors before taking any money-related decisions.