Crude-linked stocks are trading lower on July 8 as oil prices surged after the US launched military strikes against Iran, escalating tensions in the Middle East and raising fresh concerns over disruptions to global energy supplies.
Brent crude climbed as much as 2.8% to trade above $76 a barrel, while US benchmark West Texas Intermediate (WTI) rose above $72 a barrel. The US said it had carried out "powerful strikes" against Iranian targets in response to a series of attacks on commercial vessels in the Strait of Hormuz. Iranian media reported explosions on an island near the strait, while Tehran vowed to respond.
The latest escalation also saw the US Treasury revoke a sanctions waiver that had allowed Iran to continue limited oil exports under last month's interim peace agreement, effectively tightening restrictions on Iranian crude sales once again.
The rise in crude oil prices weighed on stocks across sectors that typically face higher energy and raw material costs when oil becomes more expensive.
Oil Marketing Companies
Oil marketing companies (OMCs) emerged as key losers, as higher crude prices can put pressure on marketing margins. Shares of Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. fell 3.15% each to trade at Rs 304.05 and Rs 393.15, respectively. Indian Oil Corporation Ltd. declined 1.84% to Rs 139.57.
Packaging and Adhesives
Packaging and adhesive manufacturers also traded lower, as these companies use polymers, polypropylene (PP) and high-density polyethylene (HDPE) as raw materials, which are heavily processed crude products.
Pidilite Industries Ltd. fell 1.44% to Rs 1,598.90, while Supreme Industries Ltd. declined 0.49% to Rs 3,165.70.
Tyre Makers
Tyre manufacturers also came under pressure, given that a significant portion of their raw material costs is linked to crude-based products such as synthetic rubber and carbon black. MRF Ltd. fell 1.37% to Rs 1,36,750, while Apollo Tyres Ltd. declined 0.83% to Rs 450.60.
Aviation & Travel
The aviation and travel sector was another major laggard. Higher crude prices increase aviation turbine fuel (ATF) costs, one of the largest expenses for airlines. Shares of InterGlobe Aviation Ltd. fell 1.92% to Rs 5,291.50, while SpiceJet Ltd. declined 1.13% to Rs 11.40.
In the travel space, Le Travenues Technology Ltd., the parent company of Ixigo, fell 1.93% to Rs 209.46. Yatra Online Ltd. declined 1.49% to Rs 111.25, while TBO Tek Ltd. edged 0.13% lower to Rs 1,502.90.
Paints
Paint manufacturers, which use crude-derived inputs for a sizeable share of their raw material requirements, also traded lower. Indigo Paints Ltd. fell 2.70% to Rs 1,065, while Asian Paints Ltd. declined 2.69% to Rs 2,658.
Kansai Nerolac Paints Ltd. dropped 1.64% to Rs 204.43, Berger Paints India Ltd. fell 0.76% to Rs 504.85, and Grasim Industries Ltd. declined 0.55% to Rs 3,173.20.
Benchmarks also opened lower, with the Nifty 50 down 0.57% at 24,259.55 and the Sensex falling 0.47% to 77,816.45.
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