The global oil market experienced a significant spike today, with Brent crude prices surging past USD 81 per barrel, reaching a three-month high. This sharp increase has sent shockwaves across various oil-sensitive industries, triggering widespread concerns and leading to steep declines in the stock prices of oil marketing companies (OMCs), airlines, paint manufacturers, and tyre producers.
Oil marketing companies bore the brunt of the crude price hike during an intra-day session on January 13, 2024, at 1:39 PM (IST). Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL), and Indian Oil Corporation (IOC) saw sharp declines in their stock values.
The spike in crude oil prices comes in the wake of new U.S. sanctions on Russian oil producers. These sanctions are expected to disrupt oil supplies to major importers like China and India, exacerbating concerns for industries reliant on crude as a key input.
The paint industry, heavily reliant on petrochemical-based raw materials such as solvents and resins derived from crude oil, also felt the impact of rising prices. Paint manufacturers are now grappling with the challenge of either absorbing higher costs or passing them on to consumers.
The aviation sector, which is directly affected by fluctuations in crude prices due to its influence on aviation turbine fuel (ATF) costs, also saw its stocks decline during the trading session.
The rising costs are expected to strain profitability in the aviation sector, potentially leading to higher ticket prices or tighter operational margins.
The surge in Brent crude prices has triggered a ripple effect across multiple industries that depend heavily on oil. While OMCs, airlines, and paint manufacturers were among the hardest hit, tyre manufacturers are also expected to face challenges due to increased raw material costs.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Jan 13, 2025, 3:07 PM IST
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