The possibility of Iran blocking the Strait of Hormuz – a vital route that carries around 20% of the world’s oil – has created tension in global stock markets. This concern has also affected the Indian stock market, especially companies that rely heavily on oil.
As oil prices increase due to these geopolitical issues, some sectors are getting hit harder than others. Sectors like oil marketing, aviation, paints, tyres, automobiles, chemicals, and fertilizers are seeing a bigger impact because they are closely tied to oil prices.
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What Experts Are Saying:
- Deepak Jasani, an independent analyst, explained that rising tensions could push crude oil prices higher, which will hurt industries that consume oil and benefit those that produce it.
- Ambareesh Baliga, a market expert, added that blocking the Strait of Hormuz could not only disrupt oil supply but also affect global supply chains, making trade and business more difficult.
Sectors That Could Be Affected the Most:
1. Oil Marketing Companies (OMCs)
Companies like HPCL, BPCL, and IOC are directly affected by oil prices. When crude oil becomes expensive, it’s hard for these companies to pass on the full cost to customers, which reduces their profits.
2. Aviation
Airlines are already struggling with issues like airspace closures over Iran and Pakistan. Oil prices going up adds more pressure since fuel makes up 20-30% of their costs. Companies like Indigo, SpiceJet, Jet Airways, and Global Vectra Helicorp may face challenges.
3. Paint Industry
Paint companies use oil-based products like solvents and resins, which become costlier when oil prices rise. These raw materials make up about 55-60% of production costs. Companies such as Asian Paints, Berger Paints, and Kansai Nerolac might see their profits go down.
4. Automobiles
Auto companies are affected because many parts, including tyres and plastics, are made from oil-based materials. Rising oil prices can make manufacturing more expensive and reduce consumer demand. Watch out for stocks like Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Bajaj Auto, Hyundai, and Eicher Motors.
5. Chemicals & Fertilisers
Both sectors rely heavily on crude oil and natural gas to make products. Items like synthetic rubber, plastics, and fertilizers depend on these raw materials. Companies such as Chambal Fertilisers, Deepak Nitrite, Tata Chemicals, SRF, and Navin Fluorine could feel the impact.
Conclusion
The rising oil prices caused by geopolitical risks may hurt profits in many industries, especially those that depend on oil for raw materials or operations. Investors should keep a close eye on these sectors and consult financial experts before making decisions.
