The escalating conflict between Israel and Iran has put Indian oil marketing companies (OMCs) on edge, with concerns mounting that crude oil prices might soar beyond the $100-per-barrel threshold if the standoff worsens.

On Monday, shares of all three state-owned OMCs concluded in negative territory, facing losses of up to 2.31 percent as investors hurried to sell off their stocks amid fears of dwindling profit margins.

However, there was a slight reprieve as international crude oil prices unexpectedly dipped. Iran's indication of avoiding escalation in the conflict and Israel's suggestion of not retaliating immediately contributed to the easing of market tensions.

At the time of writing, Brent futures for June delivery were trading at $89.18 per barrel, a decrease from the previous close of $90.45. Meanwhile, US West Texas Intermediate (WTI) for May delivery was priced at $84.47, down from $85.66.

Reports suggest that Iran is capable of producing 3.2 million barrels of crude oil daily and wields significant control over the Strait of Hormuz, responsible for 30 percent of oil transit and 70 percent of oil shipments to Asia.

Any disruption in oil production or transit through the Strait due to escalating tensions could lead to a rapid surge in oil prices. This scenario would adversely affect oil marketing companies, potentially limiting their ability to implement corresponding price hikes. However, upstream companies may not feel the impact as they manage realisations through windfall taxes, which could rise proportionately.

Analysts warn that the current market prices do not fully account for the possibility of a direct conflict persisting between Iran and Israel. Depending on the nature and duration of such events, oil prices could skyrocket to over $100 per barrel, presenting a significant challenge for oil-dependent economies and industries worldwide.