Fuel shock squeezes logistics margins

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WHAT WE’RE TRACKING TODAY

THIS AFTERNOON: Indian seafarers killed by US strikes in Hormuz

Good morning, everyone, and happy FRIDAY. We are wrapping up the week with a brisk issue focusing on the escalating fallout from the Gulf conflict.

The big story today: The Middle East fuel shock is weighing on India’s road logistics sector, with fleet operators projected to see their operating margins shrink by up to 200 bps this fiscal year. To keep the power grid and fertilizer plants running, Indian refiners are paying a steep 40% premium on spot LNG to replace disrupted volumes from Qatar and the UAE.

But the macro outlook remains bright: Despite the regional turbulence and a depreciating INR, BlackRock is doubling down on its bullish view of Indian equities, viewing the recent foreign sell-off as a strategic entry point. The World Bank is also holding steady, maintaining India’s growth forecast at a robust 6.6% even as it downgrades the wider global outlook.

Indian seafarers caught in Gulf tensions

Three Indian crew members were killed and 21 others were rescued after a US strike on the commercial vessel Settebello along Oman’s coast. The vessel was carrying 24 Indian crew members when it reported an engine fire following the attack with the Omani Navy responding to its distress call.

India seeks de-escalation: The Indian foreign ministry urged the US to stop attacks on shipping after three Indian-crewed tankers were hit by US forces this week. “These attacks must cease and end,” foreign ministry spokesperson Randhir Jaiswal said. India also summoned the US charge d’affaires in New Delhi to convey its “deepest concerns” after the Settebello strike.

Strike fallout: US Central Command said the Settebello was hit after the crew repeatedly failed to follow their directions and alleged the vessel had violated the US blockade by attempting to transport oil from Iran. The ship’s manager, IOS Marine FZE, rejected claims that it ignored warnings or was carrying Iranian crude, and called for an international investigation.

BlackRock still bullish on India

BlackRock sees value in Indian equities, calling them one of its “highest conviction” emerging market windows over the medium to long term. “As long as India's GDP grows between 6% and 7%, that's a nice sweet spot for the economy to keep growing, keep expanding,” Natasha Sarkaria, the firm’s EMEA investment strategy lead of wealth, told Reuters. Indian equities have been “over-punished” by investors’ concerns about the country’s lack of a direct AI window and its vulnerability to oil prices, says Sarkaria.

IN CONTEXT- India's benchmark indices — Nifty has fallen 11% YTD, while the Sensex has dropped 13% this year — as investors shifted toward AI-driven markets such as Taiwan and South Korea. High energy prices and a depreciating INR have also triggered a foreign investor sell-off.

Why it matters: A bullish outlook from the world’s largest asset manager — which oversees more than USD 14 tn in assets — suggests that global institutions continue to view India as a structural growth market despite near-term volatility and external headwinds.

Long-term outlook intact: BlackRock remains positive on financials, industrials, materials, utilities, and consumer discretionary stocks, citing favorable demographics, infrastructure spending, and resilient economic growth. The asset manager views record foreign outflows, which have exceeded USD 20 bn since the Iran war’s onset, as a strategic entry point for medium-term allocators.

World Bank cuts global growth outlook

India remains one of the world’s fastest-growing major economies despite mounting global headwinds, with the World Bank maintaining its FY 2027 growth forecast at 6.6% and upgrading its FY 2028 projection to 7.2%, as per its report.

Over the medium term, India’s trade pacts and structural reforms undertaken to improve the business environment are set to support FDI inflows. “In India, reduced revenues due to tax reforms are forecast to be partly offset by slower capital expenditure growth and reductions in non-essential current spending,” the report states.

Why it matters: The forecast attests to India’s position as a relative bright spot for Gulf investors at a time when growth expectations are being downgraded for two-thirds of the world’s economies. However, higher oil prices and regional supply disruptions continue to pose risks for India's external balances, inflation outlook and energy-intensive sectors.

Data point

USD 863 bn — that is the value of India’s total exports in FY 2026, a record high and up from USD 468 bn in FY 2015, PTI reports. The increase was led by services exports, which rose to USD 421 bn from USD 158 bn over the period.

The big story abroad

SpaceX’s historic IPO is the biggest story in the business press right now. Elon Musk’s company made history as the biggest IPO ever, raising USD 75 bn — making it double the size of Aramco’s USD 29.4 bn listing in 2019. Retail investors put in some USD 100 bn worth of orders.

AND- Underwriting banks have been given an over-allotment option to buy an additional 83.3 mn shares at the IPO price, potentially increasing the size of the IPO to USD 86 bn if fully exercised. The firm is now valued at nearly USD 1.8 tn. All eyes are now on its trading debut later today, with analysts expecting at least a 10% pop — or much more considering the hype around the IPO — and many looking towards how performance holds up over the next few weeks.

*** YOU’RE READING EnterpriseAM MENA - India, your C-suite briefing on the movement of trade, investment, people, and ideas along one of the world’s most exciting corridors. Every Monday, Wednesday, and Friday at 2:30pm UAE, we dive deep into the business, finance, economy, and policy headlines and trendlines that will move markets and set the tone for your day.

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Middle East fuel shock drives margin squeeze for Indian road logistics, says ICRA

The Middle East fuel shock is turning into a margin problem for India’s road logistics sector. Surging pump prices are projected to squeeze operating margins for India’s road logistics sector upto 200 bps in FY 2027, according to rating agency ICRA’s note (pdf). Even as fleet operators scramble to pass the burden of costlier diesel onto customers, structural cost lags and soft volume growth are choking profitability.

Why it matters: The sector is absorbing part of the Middle East crude shock. Freight rates are rising, but soft demand and delayed pass-through and a fragmented operator base mean logistics companies are still expected to lose margin in FY 2027.

The estimate is based on diesel prices rising by INR 10/litre, with 90% of that increase passed through to customers. Diesel prices have already risen by INR 7.5/litre, after four hikes in May 2026. Compressed natural gas (CNG) prices also rose by 8%.

Freight rates are rising, but not enough to protect margins. Average freight rates from Delhi to major Indian cities were 7% higher in May 2026 compared to February 2026, reflecting the fuel-price reset. The sector is still expected to report up to 10% revenue growth in FY 2027, but that will come mainly from higher freight rates rather than a surge in the cargo volumes.

Fuel accounts for 50-60% of fleet operators’ operating costs and around 55% of revenue, making diesel and CNG prices the main swing factor for margins. Other crude-linked inputs, including tyres, lubricants and diesel exhaust fluid, add to costs because they are not always covered under fuel pass-through clauses.

Smaller operators have less room to absorb the shock. Small fleet operators account for 75-80% of India’s road logistics market, while operators with fewer than five trucks make up around 80% of the industry. These operators may absorb part of the cost increase to keep trucks running.

India pays a 40% premium for spot LNG to replace Qatari and Emirati supply

Energy companies are ramping up liquefied natural gas (LNG) purchases on the spot market to offset supply disruptions from the Middle East and meet surging domestic demand. At least five state-run companies, including Indian Oil and Gujarat State Petroleum, have hit the market, issuing purchase tenders or securing spot shipments for June and July delivery, Bloomberg reports.

Why it matters: India is scrambling to fill a supply gap left by absent volumes from Qatar and the UAE. Together, the two Gulf nations have historically accounted for 57% of India’s pre-war LNG inbound shipments. That, too, at a premium of 40% per mmBtu, to keep its power grid and fertilizer plants afloat.

Why now? The buying marks a reversal of March and April, when India reduced spot purchases after the Iran war sent LNG prices soaring. Increased demand from fertilizer plants, power producers, and household consumption is driving the policy shift.

A domino effect of demand and heat: Demand from power generators has risen as extreme summer temperatures push electricity consumption to record levels. Gas-fired generation reached 651 mn units during the first week of June, up almost 70% from 383 mn units in the same period in May. The surge also comes on the back of fertilizer manufacturers — increasing output ahead of the post-summer sowing season.

By the numbers: Refiners are now purchasing six LNG shipments per month from the spot market. Before the war, they were on average picking up one shipment per month.

Shoring up oil inventories with Adnoc deliveries

Refiners have also secured enough crude oil to meet demand through August, leaning on increased UAE supplies. In recent weeks, Indian refiners increased purchases from Abu Dhabi National Oil Company (Adnoc), while procuring spot cargoes from Latin America and Africa, Reuters reports.

Adnoc delivers: Indian buyers have been lifting Adnoc crude and LPG cargoes through ship-to-ship transfers and storage hubs in Fujairah, Zirku and Das Island. State-run Hindustan Petroleum bought 4 mn barrels of Murban crude for August delivery — priced at a premium of about 40 cents per barrel — while securing additional cargoes from Brazil and West Africa. Indian Oil and Mangalore Refinery also tapped spot markets to buffer up inventories.

Why it matters: Indian state refiners bypassed shipping restrictions in the Strait of Hormuz by drawing down storage in Fujairah and orchestrating ship-to-ship transfers near Sohar, Oman, and Malaysia. Adnoc is actively insulating its largest Asian customer from regional trade blockades. Meanwhile, New Delhi and Abu Dhabi are fast-tracking plans to expand UAE-linked strategic oil reserves in India to 30 mn barrels.

India, UAE build oil buffer

India and the UAE are moving to expand Abu Dhabi-linked crude storage in India, giving New Delhi more supply cover as Middle East shipping and energy risks remain elevated, the Economic Times reports. The plan could also give India access to storage in Fujairah, the UAE’s eastern oil hub, as part of its strategic petroleum reserve network.

UAE-linked crude storage in India could increase to 30 mn barrels from 5.8 mn barrels, India’s ambassador to the UAE, Deepak Mittal, told the news outlet. However, the new storage projects could take a few years, depending on site selection, technical feasibility, and implementation.

UAE footprint: Abu Dhabi National Oil Company, the UAE’s state-owned energy company, already holds about 5.86 mn barrels at India’s Mangalore strategic reserve facility. New capacity could be added at Mangalore, Visakhapatnam, and Chandikhol.

Gas reserves next: India and the UAE are also working on a strategic gas reserve framework, including the possible use of existing LPG caverns in India and new liquefied natural gas storage facilities.

India clamps down on fuel hoarders

Bulk diesel sales are capped at 200 litres per customer per day for 90 days as well as large commercial and industrial users are barred from buying gasoline and diesel at retail outlets**.** This comes as state-owned retailers struggle to meet demand and mount losses from selling fuel below market rates, Reuters reports.

Global fertilizer shock cools as India's urea tender draws low bids

The global fertilizer supply shock triggered by the war in Iran may finally be losing its steam. India, the world’s largest urea importer, saw prices plunge to less than half of their April peaks in its latest procurement round, signaling a significant reprieve for international agricultural supply chains. State-run National Fertilizers received offers of up to USD 617/ton for its 1.7 mn tons of urea tender that closed on Monday, Bloomberg reports.

The latest offers are well below India’s April purchase level of USD 935-959/ton. The decline points to some easing from the price spike at the height of the Iran war.

Supply surplus: The latest tender also points to adequate supply for Indian buyers. National Fertilizers received 3.1 mn tons in offers against a 900k-ton target for deliveries along the west coast. Lower prices for urea could help India control its fertilizer subsidy bill, even as the country buys more spot liquefied natural gas (LNG) to support domestic urea production.

The tender comes during the June-September sowing season, when farmers plant rice, corn and soybeans. India needs about 38.4 mn tons of fertilizer for the rainy-season crop cycle, while inventories stand at about 19.8 mn tons.

India's new FTAs face deficit test and low utilization rates, says GTRI

Gulf FTAs face deficit test: India’s expanding trade architecture with the Gulf countries is running into a wall of growing trade deficits and low exporter utilization, according to a Global Trade Research Initiative (GTRI) report (pdf). While New Delhi has successfully rolled out Comprehensive Economic Partnership Agreements (CEPA) with UAE, Oman, Australia, Mauritius and the European FreeTrade Association (EUFTA), these new FTAs are coming under scrutiny for putting pressure on domestic manufacturers without delivering proportional export gains.

By the numbers: The UAE, Australia, Mauritius and EUFTA countries accounted for 11.9% of India’s exports and 14.1% of imports in 2025 closing a cumulative trade deficit of USD 50 bn, GTRI says.

The India-UAE CEPA came into effect in 2022 and the India-Oman CEPA was implemented in 2026. India is also negotiating a wider Gulf Cooperation Council (GCC) agreement, making GTRI’s concerns relevant for the next phase of India-Gulf trade policy as New Delhi tries to expand Gulf market access while managing faster import growth and low use of FTA benefits by Indian exporters

Why are imports outpacing exports? Many of India’s FTA partners already maintained low import tariffs before signing the pacts. Average most-favored-nation (MFN) tariffs sit below 4% in the UAE, Japan, Australia, and Malaysia, and hover close to zero in Singapore. In contrast, India’s MFN tariff stands at a much higher 12.6%. This asymmetry means partner-country exporters enjoy a far more substantial tariff reduction when entering the Indian market than Indian exporters receive when shipping abroad.

Utilization remains low: Only 20-30% of India’s eligible exports use FTA preferences, compared with 60-70% utilization by exporters shipping to India. Indian exporters often avoid FTA preferences because the administrative burden — including rules-of-origin compliance, certification, and extensive documentation costs — often outweighs the actual tariff savings.

Manufacturing pressure: FTAs have worsened India’s inverted duty structure by allowing finished goods from partners including the UAE, ASEAN, Japan, South Korea and Australia to enter India at low or zero duty, while Indian manufacturers continue to pay higher duties on inputs.

The GTRI is calling for an immediate overhaul of India’s tariff schedule to eliminate inverted duty structures on industrial inputs. It also recommends tighter monitoring of import surges, trade deficits, and FTA utilization rates. Crucially, the policy think tank recommends the government of India to prioritize the mutual recognition of standards, testing, and conformity assessments to eliminate the non-tariff barriers currently holding back Indian exporters.

Saudi Re names Ruchi Jain to lead GIFT City branch

Saudi Re has named Ruchi Jain (LinkedIn) as Principal Officer of its ins. and reins. office at Gujarat International Finance Tec-City (GIFT), placing a longtime Swiss Re executive in charge of its India operations, as per a LinkedIn post. Jain, who spent more than a decade at Swiss Re, most recently served as vice president and senior client underwriter, with experience spanning reins. underwriting, portfolio management, and client relations. She will oversee the operationalization of Saudi Re’s newly approved Indian branch, which received regulatory clearance from Saudi and Indian authorities in January.

Is an uptick in BDC bond sales offering reprieve for private credit?

Private credit is finally seeing some positive press for a change, with some outlets reporting signs of recovery as investors buy into high-yield bonds offered by business development companies (BDC).

BACKGROUND- It’s been a high-profile struggle for the private credit industry, with fears of a crisis brewing for some time now. The Financial Stability Board warned of risk mispricing and high default levels in the USD 2 tn sector last month, while 1Q saw wealthy investors pull more than USD 10 bn from funds, prompting managers to cap withdrawals. Software firms — a key target for private credit lenders — are also in the firing line from the AI boom.

However, bonds issued by BDCs have seen a wave of interest recently, with issuance hitting nearly USD 8.4 bn since the beginning of 2Q, after just USD 3 bn was issued in March, Bloomberg reports. ARCC’s USD 800 mn sale was 3x oversubscribed, and Blackstone’s flagship BDC’s USD 850 mn offering saw USD 4.3 bn in orders.

Behind the trend: Some are banking on BDCs’ commitment to repayment, with investors seeing the bonds as less risky than previously thought, according to the business news service. The risk premium on BDC bonds over US Treasuries has snapped back to levels last seen in February, with some analysts expecting spreads to tighten further.

Plus: Attractive yields could help give a boost to the sector. Man Group’s Chief Investment Officer Kevin Marchetti told CNBC that a spike in benchmark interest rates in the US on the back of an inflation uptick could lead to more attractive yields, especially for more disciplined lenders.

The bear case hasn't gone away, though. Underlying stressors remain — some BDCs face credit rating downgrades, and a possible mismatch between redemptions and fundraising looms. Heavyweights including Blackstone and Cliffwater are still capping withdrawals amid a wave of redemption requests.

MARKETS THIS MORNING-

Asian markets were overwhelmingly in the green this morning, likely in hopes of a potential US-Iran agreement coming soon. South Korea’s Kospi was leading gains, up 7%, while Japan’s Nikkei rose 3.4%. Meanwhile, Wall Street futures are also up as traders await SpaceX’s historic debut later today.

Sensex	75,225	+1.8% (YTD: -11.7%)
NIFTY 50	23,554	+1.7% (YTD: -9.8%)
ADX	9,752	+2.1% (YTD: -2.4%)
DFM	5,883	+2.6% (YTD: -2.7%)
Tadawul	11,042	+0.2% (YTD: +5.2%)
EGX30	50,818	-0.8% (YTD: +21.4%)
Boursa Kuwait	8,671	+0.1% (YTD: +4.4%)
QSE	10,263	-0.2% (YTD: -4.6%)
S&P 500	7,394	+1.7% (YTD: +8%)
FTSE 100	10,442	+1.3% (YTD: +5.1%)
Euro Stoxx 50	6,181	+2% (YTD: +6.7%)
Brent crude	USD 86.5	-4.2%
Natural gas (Nymex)	USD 3	-0.8%
Gold	USD 4,243	+3.1%
BTC	USD 63,591	+1.1%

The values in the table above are listed according to the market position as of 3:30pm IST / 2pm GST.

CALENDAR

JUNE

15-17 June (Monday-Wednesday): Prime Minister Narendra Modi to attend G7 Summit in Evian, France.

18-21 June (Thursday-Sunday): Bharat Buildcon, Yashobhoomi, Dwarka, Delhi.

24-25 June (Wednesday-Thursday): India Homeland Security Expo, Bharat Mandapam, Pragati Maidan, New Delhi.

26 June (Friday): Muharram.

Signposted to happen sometime in 1H 2026:

Signing of India-Qatar FreeTrade Agreement (Details yet to be announced);
India-EU Trade and Technology Council Ministerial Meeting, Brussels, Belgium;
India to host the Brics Summit.

JULY

1-3 July (Wednesday-Friday): Seafood Expo Bharat, Chennai Trade Centre, Chennai.

3-4 July (Friday-Saturday): Rail & Transit Expo (RailTrans), Bharat Mandapam, New Delhi

3-4 July (Friday-Saturday): SOMS International Exhibition & Conference, Gandhinagar, Gujarat.

8-10 July (Wednesday-Friday): India Energy Storage Week, New Delhi.

14-17 July (Tuesday-Friday): Bharat Tex, New Delhi.

22-24 July (Wednesday-Friday): Rail & Metro Technology Conclave, Bharat Mandapam, New Delhi.

AUGUST

15 August (Saturday): Independence Day.

26 August (Wednesday): Prophet Mohammad’s Birthday.

SEPTEMBER

1-3 September (Tuesday-Thursday): India Energy Week, Dwarka, New Delhi.

1-6 September (Monday-Saturday): Dubai Fashion Week, Dubai Design District.

7 September (Sunday): Opec+ meet to discuss production policy for October.

7-9 September (Monday-Wednesday): iPHEX 2026 International Pharmaceutical Exhibition, Bharat Mandapam, New Delhi.

8-11 September (Tuesday-Friday): Global Fintech Fest, Mumbai.

9 September (Tuesday): Envision 2025, Atlantis, The Royal, Dubai.

17-19 September (Thursday-Saturday): Semicon India Conference, Yashobhoomi, Delhi.

OCTOBER

2 October (Friday): Gandhi Jayanti (Mahatma Gandhi’s Birthday).

20 October (Tuesday): Dussehra.

NOVEMBER

24 November (Tuesday): Guru Nanak Jayanti.

DECEMBER

8-11 December (Tuesday-Thursday): Expand North Star, Dubai.

25 December (Friday): Christmas Day.

Signposted to happen sometime in 2H 2026:

Monsoon Session of Parliament is expected to be held in July/August in New Delhi (TBA);
Reserve Bank of India’s Monetary Policy Committee meeting for the September cycle (TBA);
India Mobile Congress will likely be held in October in New Delhi (TBA).

JANUARY 2027

30 January-3 February (Saturday-Wednesday): Printpack India, India Expo Centre, Greater Noida (Delhi NCR).

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