The heat is on Indian oil marketing companies as the Israel-Iran conflict has stoked fears that crude oil prices could cross the $100-per-barrel mark if the standoff worsens.

The shares of all three state-owned OMCs on Monday ended in the red with losses of up to 2.31 per cent as investors offloaded their stocks on fears of falling margins.

There was some relief as contrary to expectations, international crude oil prices were trading lower after Iran indicated it does not want to intensify the conflict and Israel hinted it is unlikely to retaliate immediately.

Brent futures for June delivery were trading at 89.18 per barrel at the time of writing this report, lower than the last close of $90.45.

On the other hand, the US West Texas Intermediate (WTI) for May delivery was trading at $84.47 against its previous finish of $85.66.

According to Swarnendu Bhushan, co-head of research at Prabhudas Lilladher, Iran produces 3.2 million barrels per day of crude oil and it also has a significant control on the Strait of Hormuz which accounts for 30 per cent of oil transit and 70 per cent of oil shipment to Asia.

“Any escalation that may impact the oil production of Iran or affect the oil transit through the Strait can result in a sharp spike in the oil prices,” he said.

“This would affect oil marketing companies negatively as they may not be able to take commensurate price hikes. For upstream companies, realisation is managed through windfall taxes which may rise commensurately, and hence have no impact on upstream companies.’’

“What is not priced into the current market, in our view, is a potential continuation of a direct conflict between Iran and Israel, which we estimate could see oil prices trade up to more than $100 per barrel, depending on the nature of the events,” Max Layton of Citi said in a note.