Reliance Shares Fall Amid Geopolitical Tensions And Crude Oil Price Surge

Mumbai, June 13, 2025: Shares of Reliance Industries (RIL) slipped today and were trading 1.65%, or ₹23.80 down at ₹1,417.80 at around 10:45 A.M, on the June 13th market session.

This is due to the escalating geopolitical tensions in the Middle East and the ensuing surge in global crude oil prices. The decline is also supported by the Brent crude price spike of more than 13% on Thursday, marking its biggest one-day gain since May 2022, following Israel’s “Operation Rising Lion” military strikes on Iranian targets.

The renewed conflict in the Middle East has disrupted global markets, reviving concerns about potential disruptions in oil supply from a region that contributes nearly one-third of the world’s crude production. West Texas Intermediate (WTI) prices also recorded significant gains in tandem with Brent.

Strategic Concerns Heighten Around the Strait of Hormuz

Market analysts are now closely monitoring the Strait of Hormuz, a vital maritime chokepoint through which approximately 20-30% of the world’s oil supply and roughly 20% of global liquefied natural gas (LNG) trade pass. Any retaliatory actions by Iran that could affect oil infrastructure in this critical waterway would severely constrain global supplies, leading to further price spikes. These recent military developments have overshadowed previous downward pressures on oil prices, which were influenced by factors such as trade frictions and OPEC+ moves to boost production capacity.

Broader Market Implications for Reliance Industries

Reliance Industries, being a major integrated player in the oil-to-chemicals (O2C) sector, is particularly sensitive to fluctuations in crude prices. While higher oil prices can indeed benefit its upstream exploration and production operations (such as those of ONGC and Oil India, which saw gains today), they simultaneously lead to a significant increase in input costs for its refining and petrochemical businesses. This can potentially squeeze refining margins and impact the profitability of its petrochemical segments.

For instance, RIL, like other refiners, incurs higher operational expenses when crude prices rise rapidly. While the company has demonstrated strength in maintaining margins in the past, a sustained period of elevated oil prices could pose a challenge. Furthermore, the higher cost of naphtha and other crude derivatives directly impacts the feedstock costs for its petrochemical production, potentially affecting product margins if the increase cannot be fully passed on to consumers.

What’s Ahead? 

With oil now on track for its biggest weekly gain since 2022 (nearing 14% gains), markets are expected to remain highly volatile until there is greater clarity on the geopolitical developments. The India VIX has already jumped over 10% to 15.53, indicating heightened market uncertainty. Investors are advised to closely monitor the situation, as further escalations in the Middle East could intensify pressure on energy-linked equities, including Reliance Industries. The company’s diversified business interests, including its growing telecom (Jio) and retail segments, offer some cushion, but the O2C segment remains a significant earnings driver exposed to crude price volatility.

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