Israel-Iran conflict pushes crude oil prices higher; here’s how aviation, paints, and oil stocks reacted

Shares of oil companies and aviation stocks remained under stress on Wednesday amid continued surge in crude oil prices as the Israel-Iran conflict entered its sixth day, raising concerns about potential oil supply disruptions. At 11.50 a.m., August Brent oil futures were at $76.08, while August crude oil futures on WTI (West Texas Intermediate) were at $72.68. On the Multi Commodity Exchange (MCX), July crude oil futures were trading at ₹6,301, marginally up against the previous closing price.

The heightened geopolitical tensions have impacted oil-related stocks, such as aviation, paints, and that of oil marketing companies.

Shares of airline companies— Spicejet and IndiGo parent InterGlobe Aviation —fell by up to 1% today amid concerns that a rise in crude prices would propel aviation turbine fuel (ATF) higher. ATF is a direct derivative of crude oil and constitutes a significant portion (30-40%) of an airline's operating expenses.  

Shares of paint companies such as Asian Paints and Indigo Paints were marginally down, while Berger Paints , Grasim, and Kansai Nerolac were trading a tad higher. The paint industry is highly dependent on petroleum-based raw materials such as solvents, resins, phthalic anhydride, and titanium dioxide, which account for 40-60% of total raw material costs.

In the oil and gas space, state-owned oil marketing companies (OMCs) such as Hindustan Petroleum Corporation (HPCL) Bharat Petroleum Corporation (BPCL), GAIL India , Oil and Natural Gas Corporation (ONGC) , Oil India Ltd (OIL),  Indraprastha Gas (IGL) , and Indian Oil Corporation (IOC) fell by up to 3% during the day's trade so far.

Among private players, Reliance Industries was marginally down by 0.3%, while Adani Total Gas shares surged by up to 1%.

Meanwhile, the BSE Oil & Gas index and Nifty Oil and Gas Index were down by up to 1%, while the domestic equity benchmarks, the Sensex and the Nifty, were trading lower by 20% each at the time of reporting.

Will oil prices stabilise soon?

Israel’s sudden attack on Iranian nuclear sites and personnel led to an immediate 12-13% spike in oil prices, with brent reaching almost $80 per barrel. Prices have hovered around $75/bbl since then, though attacks by the two countries have intensified, Emkay Global said in a report.

As per the report, an end to the war can cool off oil prices below $70/bbl; as seen in the Russia-Ukraine war, unless major oil and gas supply infrastructure is structurally affected in a few weeks. The brokerage continues to assume average brent price at $70/bbl for the year and expect prices to stabilise in a few weeks, citing that oil markets are well supplied so far in 2025, with rising OPEC+ and non-OPEC+ production and inventory build-up.

“Brent at $70/bbl is a safe spot for OMCs and upstream players’ earnings and current valuation,” the report noted. In terms of target price, OMCs are more attractive versus upstream, saying that oil moving towards $80/bbl will drive upstream earnings and valuations. On the other hand, a decline in brent price would support OMCs as brent at $70/bbl would also mean a lesser risk of retail price cuts in petrol and diesel.

“For OMCs, we see no downgrade risk up to $75/bbl in 9MFY26. LPG subsidy, if paid, can lead to upgrades,” it added.

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