Rising oil prices could hurt the business of these sectors and stocks the most

The threat of Iran closing the Strait of Hormuz, a critical chokepoint handling nearly 20% of global oil supply, has cast a shadow over equities globally with the Indian stock market being no exception.

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26 Aug, 2025 12:21

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The threat of Iran closing the Strait of Hormuz - a critical chokepoint handling nearly 20% of global oil supply - has cast a shadow over equities globally, with the Indian stock market being no exception as shares of oil-dependent companies reflected the sharpest reactions.

While stocks and sectors across-the-board have come under selling pressure, select sectors – oil marketing companies, aviation, paints, tyres, automobiles, chemicals, and fertilizers among others – are showing higher impact due to a greater correlation with oil prices. Read More

“The expectation is that because of rising hostilities, crude oil prices will rise. So, if crude oil prices rise, then oil-consuming industries will be hit while oil-producing industries will benefit,” said independent analyst Deepak Jasani.

Market expert Ambareesh Baliga said the latest developments would dampen investor sentiment due to a potential supply chain ripple effect.

“The immediate reaction of Iran to block the Strait of Hormuz will block the major oil supplies as well as your supply chain overall, globally. So that means dampened trade sentiments. Along with that, certain chemical segments, including paints, and also auto-accelerators like tyres, will get affected,” said Baliga.

Here are the key sectors to watch out for.

Oil marketing companies (OMCs)
No other sector is as directly-linked to crude prices as the oil marketing companies. Crude prices directly impact the margins of HPCL, BPCL and IOC, as passing on the full impact of the crude surge is not always possible, with higher crude shrinking the margins of OMCs, thereby impacting overall profitability.

Aviation
The airline sector is already bearing the brunt of geopolitical concerns, which has led to airspace closures over Iran, and above Pakistan following Op Sindoor, thus impacting the cost of operation. The the recent crash involving Air India’s Boeing 787 aircraft has set in motion an investigation which will be closely followed over next few months, along with additional technical checks. The Israel-Iran conflict had forced airlines to cancel few flights due to the closure of airspace. With the sector already facing many concurrent headwinds, a spike in crude prices will weigh on the airlines’ bottomline as fuel cost accounts for nearly 20-30 percent of operating expense. Interglobe Aviation (Indigo), Spicejet, Jet Airways (India) and Global Vectra Helicorp could be impacted.

Paints
Crude derivatives like solvents and resins are important raw materials for the paint industry and a spike in crude prices pushes up the overall input costs of the industry. Rough estimates suggest that these raw materials account for up to 55-60 percent of the input costs for the paint industry. “The prices of raw materials account for 50-60% of total sales. The key raw materials used in paint manufacturing are titanium dioxide, phthalic anhydride, solvents, pigments, resins, and other crude oil derivatives,” stated a report by Wright Research. Asian Paints, Berger Paints, and Kansai Nerolac Paints among others could see margin pressures going ahead.

Automobiles
The automobile companies too get impacted by crude price movements. The manufacturing process involves raw materials like paints, tyres, and plastics among other things whose prices go up with crude prices rising. Like OMCs, it may not always be possible for car companies to pass on higher manufacturing costs to consumers due to intense competition. Higher crude can be a double whammy for the auto industry with the manufacturing costs going up on one hand, even as the demand may see some softening. Stocks like Maruti Suzuki, M&M, Tata Motors, Baja Auto, Hyundai Motor India, Eicher Motors among others will remain in focus over next few days.

Chemicals, Petrochemicals & Fertilisers
The chemical & fertiliser sectors is not always in the limelight through both play an important role in the overall economic growth of any country, including India. Both the industries are heavily dependent on crude prices. For the chemical industry, crude and natural gas are essential raw materials, processed to produce petrochemical derivatives including benzene, butadiene, ethylene, and propylene that are used in the production of synthetic rubber and plastics, among other things. For the fertiliser sector, reliance on raw materials like natural gas, phosphate rock, potassium salts, and sulphur is high – most of these are derived from crude oil or natural gas. Stocks like Chambal Fertilisers, Nagarjuna Fertilizers, GSFC, RCF, Supreme Petrochem, Panama Petrochem, DCW, Manali Petrochemicals, Deepak Nitrite, Bayer Corpscience, Navin Flourine, Vinati Organics, Tata Chemicals and SRF among others are likely to see an impact.

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