Oil tops $100 amid Iran-Israel tensions; Asian Paints, Indigo and other crude-sensitive stocks fell up to 4%

Shares of crude-sensitive companies such as paint and tire makers, including airlines, fell as much as 4% on Thursday after rising tensions in the Middle East pushed crude oil prices back above the $100-a-barrel mark.

Shares of Asian Paints and Indigo Paints fell as much as 2%, while Indigo sank nearly 4%. MRF and Apollo Tires were down around 1% and 4% respectively in the morning trading hours.

These stocks saw a sharp decline after crude oil prices broke above the key psychological level of $100 on Monday for the first time since Russia’s invasion of Ukraine in 2022. Oil prices cooled shortly after, falling below $90 on hopes of a missed strike and an early end to the Iran-launched war earlier this month. The supreme leader, Ayatollah Khamenei, retaliated massively from Tehran.

On Wednesday, Iran reportedly set fire to two tankers in Iraqi waters and warned that the world should prepare for oil prices to reach $200 a barrel. “Be prepared for the price of oil to hit $200 a barrel, because the price of oil depends on regional security, which you have destabilized,” said a spokesman for Iran’s military command.

Iran also targeted fuel tanks at a facility in Muharraq, Bahrain, the interior ministry said. Iraqi security officials added that an Iranian explosive-laden boat struck two fuel oil tankers. In addition, multiple drones hit fuel storage tanks at the port of Salalah in Oman, setting at least two tanks on fire.

The latest developments have further dampened hopes for a near-term end to conflict in the Middle East and the resumption of normal shipping through the Strait of Hormuz, a critical chokepoint for global oil trade.

As hostilities intensified, oil prices rose despite the International Energy Agency (IEA) agreeing to ease supply constraints – its largest-ever stock release – of 400 million barrels from members’ strategic reserves.

Brent crude futures jumped more than 9% to $100.3 a barrel, while WTI crude rose more than 8% to $94.66 a barrel by 8:45 p.m.

Shares of Asian Paints and Berger Paints have fallen around 7% in the past one month, while Indigo Paints has tumbled 17%. MRF fell 10% and Apollo Tires 14%. Shares of IndiGo have fallen 13% during the period, while SpiceJet has fallen over 26%.

Paint and tire companies use crude oil as a major raw material and rising oil prices can put pressure on their margins. For airlines, higher crude prices increase aviation fuel costs.

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