OMCs, paint and tyre stocks slip as crude oil prices see sharp surge amid Middle East violence

Israel-Palestine conflict, crude oil prices: Brent crude rose $4.18, or 4.94 Per cent, to $88.76 a barrel by 0120 GMT, while U.S. West Texas Intermediate crude was at $87.02 a barrel, up $4.23, or 5.11 Per cent.

Shares of Indian Oil Corporation (IOC) opened with a cut of 2 per cent at Rs 88.01. (Image credit: Reuters)

Israel-Palestine conflict, crude oil prices: Oil marketing companies (OMC) stocks in early trade on Monday (October 9, 2023) were seen reeling under pressure as oil prices climbed by a sharp 5 per cent in early Asian trade amid military conflict in the Middle East. The heightened political uncertainty in the region poses concerns about a supply disruption from the Middle East, which accounts for around one-third of global supply.

Brent crude rose $4.18, or 4.94 per cent, to $88.76 a barrel by 0120 GMT, while US West Texas Intermediate crude was at $87.02 a barrel, up $4.23, or 5.11 per cent.

Shares of Indian Oil Corporation (IOC) opened with a cut of 2 per cent at Rs 88.01, while Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation Limited (BPCL) traded 3 per cent and 2.68 per cent lower at Rs 250 and Rs 337.75 per share on the BSE, respectively.

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Meanwhile, oil exploration and production stocks Oil India and ONGC traded in the green with gains of 2.72 per cent and 0.69 per cent, respectively, while Petronet LNG traded with a cut of over 1 per cent.

Paint stocks, too, were seen trading lower as crude derivatives are a major raw material used in the production of paints. Asian Paints, Berger Paints, Indigo Paints, and Kansai Nerolac fell up to 2 per cent in early trade.

Similarly, as the tyre industry uses crude oil derivatives for manufacturing synthetic rubber, stocks from the space MRF traded 0.65 per cent lower, while Apollo Tyres was down 2.58 per cent on the BSE. Goodyear India also traded weak by 0.62 per cent at Rs 1311.15 per share.

In a recent report, Moody’s said that high crude oil prices will reduce the profitability of three state-run oil marketing companies in India. The companies included BPCL, HPCL, and IOC, all commanding a Baa3 rating by Moody's.

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