The ripple effect sent Indian oil marketing companies (OMCs) tumbling, with losses reaching up to 6% amid concerns of costlier feedstock.
Brent crude futures soared nearly $6 to $75.36 per barrel, their highest level in months, while West Texas Intermediate (WTI) jumped $6.16 to $74.20, after Israel launched strikes on Iranian nuclear and military facilities. The escalation spurred fears of global oil supply disruptions, especially through the strategically vital Strait of Hormuz.
Reliance, which operates both refining and retail fuel arms, was caught in the crossfire. While upstream oil producers may benefit from higher crude prices, integrated energy companies like Reliance can face margin pressure if feedstock costs rise faster than product prices.
Meanwhile, Indian Oil Corporation (IOC) dropped 3.9% to Rs 137.40, Bharat Petroleum Corporation (BPCL) slid 6.1% to Rs 299.20, and Hindustan Petroleum Corporation (HPCL) lost 5.3% to Rs 371.35 on the BSE. The declines reflected rising pressure on companies that rely heavily on imported crude.
“The economic consequences of this Israeli strike can be profound if the attack and counter attack by Iran lingers long. Israel has declared that the operation will last several days. Brent crude prices have flared up by around 12% to $78. It can rise further if Iran in retaliation closes the Strait of Hormuz severely restricting oil supply,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.Markets globally reacted with alarm. Asian equities plunged, Wall Street futures fell, and investors rushed to safe havens such as gold, which rose 1.5% to $3,434 per ounce, and the Swiss franc.“The impact on market will depend on how long the conflict lingers. In the near-term the market will be in a risk-off mode. Sectors that use oil derivatives as inputs like aviation, paints, adhesives and tyres will be hit hard. Oil producers like ONGC and Oil India will remain resilient,” Vijayakumar added.
Strait of Hormuz fears tempered
Despite fears of escalation, JP Morgan downplayed the likelihood of Iran closing the Strait of Hormuz, a critical chokepoint through which roughly a fifth of global oil flows.
“The closure of Hormuz is a low-risk event as Iran would be damaging its own position, both economically and politically, by irritating its main customer,” the investment bank said. Still, the potential for even temporary disruption continues to weigh on sentiment.
Strikes deepen Middle East turmoil
The conflict escalated sharply after Israel carried out coordinated attacks on Iranian nuclear sites, missile facilities, and military personnel. Iranian media confirmed the death of top Revolutionary Guards commander Hossein Salami and reported casualties including children in Tehran.
Israel declared a state of emergency, anticipating retaliatory strikes from Iran. “Preemptive strike” was the term used by Israeli officials to describe the operation aimed at halting Iran’s nuclear ambitions.
Meanwhile, U.S. Secretary of State Marco Rubio stressed that the United States had no role in the Israeli offensive, calling it a “unilateral action.” With diplomatic talks between Iran and the U.S. deadlocked, a sixth round of discussions is scheduled in Oman on Sunday amid a backdrop of intensifying violence.
Also read | Oil jumps more than 12% as Israel strikes Iran, rattling investors
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