'Any attack by the US on Iran': Stocks to watch in Union Budget 2026

In a note on energy markets, Nomura on Wednesday said US sanctions on crude imports from Russian entities Rosneft and Lukoil resulted in a one-third drop in import volumes from Russia to 1.2 mbpd (million barrels per day) in December from 1.8 mbpd in November. With the US President considering a potential strike on Iran, among other options, the Strait Of Hormuz, through which 20mbpd crude oil flows, is back in focus, it noted. Amid global developments, the foreign brokerage said current record margins for oil marketing companies (OMCs) such as IOC, HPCL and BPCL are a risk going into the Budget 2026.

Nomura sees good probability of an increase excise duties on petrol and diesel in the Budget. 

US sanctions on Russian oil
Citing media reports, Nomura said there are indicators that Russia has been working on reorganising its supply chain to allow importers to circumvent US sanctions. Several new Russian oil exporters have emerged, which may likely play as shadow middlemen between the sanctioned Russian entities and
importers in India. It may take two-to-three months before the supply chain is fully reorganised, it said.

"Moreover, there has been no direct mandate to the Indian refiners from the government to bring down their dependence on Russia. The discount on Russian crude continues to be attractive at8.4 a barrel vs dated Brent, thus saving the country $3.7 billion annually based on the current intake of 1.2mbpd," Nomura said.
It noted that Reliance Industries Ltd is the only exception as it has publicly declared that it will not import any Russian oil to abide by US and EU sanctions. 

"On the other hand, Reliance is seeking the opportunity to resume purchases of Venezuelan crude and is currently under discussions with the US. At its peak, Reliance imported ~400kbpd of Venezuelan Merey crude in 2013, ~30% of its total intake," it said.

Iran: Risk of oil blockade returns
Nomura said it expects a sharp volatility in oil prices in the wake of any attack by the US on Iran. However, like in the past, the impact may only last for a short period and crude may trend back to lower levels given the soft outlook amid surplus of 4mbpd in 2026, as per IEA.

OMC stocks in focus
Nomura said given the tight fiscal situation in India after the significant cuts in GST rates late last year, and OMCs making record-high integrated margins, the government may be tempted to increase excise duties on petrol and diesel in the upcoming Budget scheduled on February 1, 2026. 

"We estimate Rs 16,000 crore increased collection for every Re 1 per litre increase in the excise duty for petrol and diesel. Impact to OMCs will be significant, with 13.5 per cent/12.4 per cent/ 10.9 per cent consolidated Ebitda hit to our FY26F estimates for HPCL/ BPCL/IOCL for every Re 1 per litre higher excise duty," it said. 

The petroleum sector has been a significant contributor to the Central exchequer over the years, with more than Rs 4 lakh crore contribution in FY25 via excise, royalty, customs duty, GST, income tax and dividends,. Almost two-thirds of this came via excise duties on petrol and diesel in FY25, Nomura noted.