How will the surge in crude oil prices affect various sectors?
ET Intelligence Group: The latest surge in global prices of crude oil, unless short-lived, may potentially affect profitability of companies in the select sectors that either process it to produce finished products or consume intermediates derived from it. Companies in the sectors including crude oil refining, paints, aviation, automobiles, petrochemicals and fertilisers are expected to be affected by the rapid increase in crude prices whereas those in the business of oil production or upstream companies and companies in the electric vehicles (EV) segment may benefit depending upon the government's policies.
Brent crude futures jumped 7% to settle at $74.23 per barrel on Friday, after briefly soaring over 13% to touch an intraday high of $78.50, as fears of supply disruption due to escalating tension between Israel and Iran rattled energy markets. Since India imports over 85% of the crude oil requirement, a sustained rise in oil prices may result in broader inflationary pressures. However, the exact impact hinges on how long prices remain elevated.
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
Affordable Apartments for Rent in Azemmour
Apartments for rent | Search Ads
Learn More
Undo
"It is too early to fully gauge the impact. A prolonged spike could put significant pressure on corporate margins," said Narendra Solanki, fundamental research head, Anand Rathi Shares and Stock Brokers. He added that if prices retreat soon, the effect on companies will be minimal.
"We lift our three-month price target to $72.5, while our view and long term targets remain unchanged at Neutral and $60," said Norbert Rucker, head economics, Julius Baer, in an email quote citing that structural setting of the oil market should remain unscathed.
Oil Marketing Companies
(OMCs): Margin pressure looms
Live Events
Companies such as
Indian Oil Corp
,
BPCL
, and
HPCL
may face shrinking margins. While higher
crude oil prices
raise refining costs, OMCs may not be able to fully pass on the impact to end users, leading to potential under-recoveries and profit erosion.
Oil & Gas Producers: Beneficiaries of the surge
Upstream companies such as
ONGC
and
Oil India
sell domestically produced crude at prices linked to global benchmarks. While sustained rally in oil prices potentially improve their realisations, the effect on their revenues, and profit margins will depend upon the government's stance. For instance, it levied a windfall tax on profits of oil producers between July 2022 and December 2024 when crude prices rose due to the Russia-Ukraine conflict.
Aviation: Soaring fuel bills
Aviation turbine fuel (ATF) or jet fuel, derived from crude, forms over one-third of an airline's operating cost. A rise in crude prices inflates fuel expenses, putting pressure on the bottom lines of carriers. Airlines may respond by increasing fare, but at the risk of dampening demand in a price-sensitive market.
Paints: Costs could dull profitability
Paint manufacturers like
Asian Paints
,
Berger Paints
, and
Kansai Nerolac
depend on crude derivatives such as solvents and resins, which form nearly 50% of total costs. Rising crude prices could force companies to increase retail prices, potentially hurting demand and market growth.
Chemicals & Petrochemicals: Feedstock woes
Naphtha, ethane, propane, and other crude derivatives are essential feedstocks for producing plastics, synthetic fibres, solvents, and a vast array of chemicals. Raw material cost is nearly half of the total revenues for chemical and petrochemical firms. Companies like
Pidilite
,
SRF
,
Aarti Industries
, and
Deepak Nitrite
will face a surge in raw material costs if crude prices stay elevated for a longer period.
Fertiliser companies: Energy cost overhang
The production of nitrogen-based fertilisers, particularly urea and ammonia, depends on natural gas and oil as feedstock.
Rising crude often pulls up LNG (liquefied natural gas) prices, making fertiliser production more expensive. This could lead to higher retail prices and a larger subsidy burden for the government.
Automobiles: Input costs up, electric vehicles get a boost
Automobile manufacturers may witness a rise in costs due to more expensive plastics, rubber, and composites-all derived from petroleum. While this could put pressure on the profit margins of traditional automakers, the surge in fuel prices could enhance the appeal of electric vehicles (EVs), giving the manufacturers of electrics a relative advantage.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
an hour ago
- Time of India
Virgo Daily Health Horoscope Today, June 22, 2025: Trust the slowness
Virgo, daily horoscopes await your discovery according to how mighty planets act on your health and vitality. Get helpful insights to coordinate your day with clarity and confidence. Maintain your balance and bask in the good cosmic vibes. Today, you may feel that progress is slow, but trust that this pace is necessary. Slowness is not a setback; it allows you to build strong foundations and make wise choices. Don't rush or pressure yourself. Patience and steady effort will bring better results than hasty actions. Trust the process and know that your careful approach leads to lasting success and peace. Leo Health Horoscope Today Your health improves when you respect your body's natural rhythms today. Avoid pushing yourself too hard or skipping rest. A balanced diet and gentle exercise like yoga or walking will support your strength. Drinking enough water and getting quality sleep is important. Leo Wellness Horoscope Today Wellness today comes from honouring your need for calm and routine. Slow down and practice mindfulness or meditation to soothe your mind. Avoid multitasking or stressful situations that disrupt your balance. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Perdagangkan CFD Emas dengan Broker Tepercaya IC Markets Mendaftar Undo Simple daily habits like clean eating and regular rest will improve your well-being. Trust that steady care creates lasting peace in your body and soul. Leo Love Horoscope Today In love, take time to nurture your relationships patiently. Avoid rushing talks or decisions. Slow, steady affection and understanding will deepen bonds. If single, trust that the right person will come at the right time. Allow feelings to grow naturally without pressure. Patience in love brings harmony and lasting happiness today. Leo Career Horoscope Today Career progress benefits from your careful and methodical approach. Avoid impulsive moves or quick decisions. Focus on detailed planning and consistent work. Taking small, steady steps will impress your superiors and bring success. Trust that slow progress today is laying the groundwork for greater achievements ahead. Leo Money Horoscope Today Financially, avoid rushing into spending or investments. Take time to review your options carefully. Slow, thoughtful money management will bring stability and growth. Trust that steady saving and smart decisions attract financial security. Patience and careful planning are your best tools for prosperity today. Leo Affirmation Today: I trust the slow pace; it leads me to success. Discover everything about astrology at the Times of India , including daily horoscopes for Aries , Taurus , Gemini , Cancer , Leo , Virgo , Libra , Scorpio , Sagittarius , Capricorn , Aquarius , and Pisces .
Time of India
an hour ago
- Time of India
Urban challenge fund to focus on revitalising core areas of cities
Danny generated AI Image NEW DELHI: The next phase of central assistance (seed funding) for states to take up transformative projects under the Rs 1 lakh crore Urban Challenge Fund (UCF) will focus more on revitalising core areas of cities and fixing legacy infrastructure gaps, such as bad drainage, sanitation and polluted water bodies. Officials said the focus of this funding will be on projects that have a transformative impact. Centre will provide such financial aids to 500-1,000 small cities as well to take up projects, they said. The housing and urban affairs ministry has finalised the UCF scheme and it is likely to be launched soon, sources said. TOI on Jan 13 had reported that PM Narendra Modi has directed ministry officials to focus more on creating facilities, amenities and better transportation network in those areas of cities which naturally attract people and businesses, rather than developing new cities. Following the PM's direction, more thrust is now on having a better framework for transit-oriented development (TOD) for cities to push intensive and planned growth along transportation networks, the sources said. Speaking at a CII-organised conference, additional secretary in the ministry, D Thara, said, "In UCF, we are looking at revitalisation of cities and fixing of legacy infrastructure as a primary goal. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Memperdagangkan CFD Emas dengan salah satu spread terendah? IC Markets Mendaftar Undo We are not in a hurry to fund. We are clear that these projects should bring huge transformation and big impact. It can't be unfixing small things here and there. The project could be of any size but it has to be make a lot of difference to citizens. " The focus is not about building afresh but about fixing what already exists, she added. Officials said under UCF, govt is also likely to provide seed fund for developing new greenfield areas, with good rail connectivity, as future cities. In her Budget speech, finance minister Nirmala Sitharaman had announced the seting up of UCF to implement proposals for 'Cities as Growth Hubs', 'Creative Redevelopment of Cities' and 'Water and Sanitation'.
Time of India
an hour ago
- Time of India
Leo Daily Health Horoscope Today, June 22, 2025: Don't ignore what keeps tugging
Leo, daily horoscopes await your discovery according to how mighty planets act on your health and vitality. Get helpful insights to coordinate your day with clarity and confidence. Maintain your balance and bask in the good cosmic vibes. Today, something may keep tugging at your awareness—don't ignore it. Your intuition is trying to guide you toward an important truth or decision. Pay attention to subtle signs and inner feelings. Trust yourself even if things seem unclear. Being mindful will help you avoid mistakes and open new opportunities. Stay alert and listen closely to what your heart and mind are saying. Leo Health Horoscope Today Your health may feel a bit off if you ignore small signs your body sends. Don't overlook any discomfort or fatigue. Eat nutritious food and keep yourself hydrated. Gentle exercises like walking or stretching will refresh you. Avoid stressful situations and get enough rest. Taking care of your body's signals today will prevent bigger health problems tomorrow. Leo Wellness Horoscope Today Wellness today requires listening deeply to your inner needs. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Free P2,000 GCash eGift UnionBank Credit Card Apply Now Undo Avoid rushing and create space for calm reflection. Meditation or quiet time will help you connect with your deeper self. Try to stay away from distractions that pull you away from your focus. Prioritize mental peace and nourish your soul with positivity. Your well-being improves when you honor your inner voice. Leo Love Horoscope Today In love, pay attention to subtle signals from your partner or crush. Small gestures or feelings may reveal deeper emotions. Being present and listening will deepen your bond. Don't rush, but let things unfold naturally. Openness to what you sense will bring warmth and understanding in your relationships. Leo Career Horoscope Today At work, your awareness can help you spot hidden opportunities or issues. Stay observant and trust your gut about decisions. Avoid ignoring minor problems as they could grow bigger. Focus on details and communicate clearly with your team. Your alertness and intuition will impress superiors and lead to positive outcomes in your career today. Leo Money Horoscope Today Money matters improve when you pay attention to subtle signs about spending or investments. Don't ignore new ideas or opportunities just because they seem small or unfamiliar. Trust your instincts and explore possibilities carefully. Taking action on what your awareness reveals may bring financial growth. Stay open and alert to changes that can increase your prosperity. Leo Affirmation Today: I trust my inner guidance and follow my true awareness. Discover everything about astrology at the Times of India , including daily horoscopes for Aries , Taurus , Gemini , Cancer , Leo , Virgo , Libra , Scorpio , Sagittarius , Capricorn , Aquarius , and Pisces .
