Oil Prices Rise Further as Iran's Parliament Approves Blocking of Strait of Hormuz

Mumbai, 23 June 2025: Mounting geopolitical tensions in the Middle East particularly Iran’s threat to block the Strait of Hormuz, a vital maritime route responsible for nearly 20% of global oil shipments have driven crude oil prices sharply higher, unsettling Indian equity markets. Iran’s Parliament  yesterday approved the blocking of Strait of Hormuz. At 3:57 p.m. IST, 23rd June, WTI crude for August delivery is up 0.50%, trading at $74.19 per barrel. Brent crude for August delivery is up by 0.57%, trading at $77.45 per barrel.

The prospect of a supply disruption through this strategic chokepoint has sparked a surge in oil prices, exerting significant pressure on sectors heavily dependent on petroleum-based inputs and prompting a broad-based sell-off across domestic stock indices

Sectoral Snapshot: Who’s Most Exposed?

• Oil Marketing Companies (OMCs): Shares of HPCL, BPCL and IOC are under strain as margin compression intensifies – these firms often struggle to pass increased crude costs on to consumers. For example, HPCL shares recently fell to ₹387.05, down 1.33%.
• Aviation: With fuel accounting for 20–30% of airline operating costs, carriers like IndiGo, SpiceJet and Jet Airways are facing renewed pressure amid fuel-cost spikes and earlier airspace closures over Iran and Pakistan.
• Paints: Manufacturers such as Asian Paints, Berger, and Kansai Nerolac depend on crude derivatives like resins and solvents, which represent up to 60% of costs, squeezing margins sharply.
• Automobiles: Rising crude elevate the price of fuel-derived parts plastics, tyres, paints while high fuel costs could further discourage consumer spending, pulling down Maruti, Mahindra, Tata Motors, Bajaj Auto, and Eicher.
• Chemicals, Petrochemicals & Fertilisers: Firms including Chambal, GSFC, RCF, Deepak Nitrite, Tata Chemicals and SRF face increased input costs from both crude and natural gas derivatives, further pressuring margins.

Broader Market Impacts: Key Company Moves Amid Oil Price Shock

HPCL Eyes LNG to Offset Oil Risk

HPCL is diversifying into gas, signing an LNG deal with NTPC and planning long-term imports via its Chhara terminal from 2027. This move could cushion the impact of rising crude prices on margins.

IndiGo Expands Despite Rising Fuel Costs

IndiGo has doubled its order for Airbus A350-900 aircraft, signalling confidence in long-haul operations. It also plans to launch eight new domestic routes from July, highlighting continued growth.

Stake Sale Buzz Hits IndiGo Shares

Market rumours of a 4% stake sale by InterGlobe Enterprises led to a sharp fall in IndiGo’s stock. Though denied, the reaction revealed investor nervousness amid fuel cost concerns.

Air India Disruptions Deepen Sector Pressure

Following a fatal crash on 12 June, Air India grounded aircraft and slashed 15% of its international flights. The incident adds to the aviation sector’s fuel price and route challenges.

What Lies Ahead

In the coming weeks, all eyes will remain on crude oil prices, as any renewed tension in the Strait of Hormuz could trigger further spikes. Investors should closely track oil marketing companies (OMCs) for upcoming earnings announcements and any signs of government intervention or subsidies aimed at easing margin pressure. The aviation sector also warrants attention, particularly for updates on route changes, capacity cuts, or fresh announcements regarding fleet expansion.

Strategically, some companies may weather the storm better than others. HPCL’s increasing focus on LNG ventures could help mitigate the impact of rising crude prices in the long term. Meanwhile, IndiGo’s push into long-haul international routes and expansion of its domestic network signals operational resilience and growth ambition, even amid market volatility.

Final Word

Rising crude oil prices sparked by Strait of Hormuz tensions are triggering market-wide ripples across India’s heavily affected sectors: aviation, oil marketing, paints, autos, chemicals and fertilisers. While added insight HPCL’s gas diversification, IndiGo’s fleet and route growth, InterGlobe’s stake-sale saga, and Air India’s post-crash disruptions adds richness, investors must track near-term crude trends and structural resilience in these businesses.

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