Crude-Sensitive Stocks Advance As Brent Falls Below $80 Per Barrel

Shares of tyre manufacturers, oil marketing companies and airline operators traded higher on June 17 after Brent crude slipped below $80 per barrel, extending its recent decline amid expectations of improved global oil supplies.

The rally followed a sharp drop in crude prices, with investors reacting positively to reports that a potential agreement between the U.S. and Iran could lead to the reopening of the Strait of Hormuz and support the flow of oil exports from the region.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Apollo Tyres was up 5.52% at ₹439.45, and JK Tyre & Industries was up 3.47% at ₹400.60. It may be noted that the tyre industry tends to be positively impacted by cheaper crude oil, as oil derivatives play a crucial role in tyre production.

Gains Made by Oil Marketers

The stock prices of companies dealing in oil marketing also showed signs of upward momentum. For example, Bharat Petroleum Corporation (BPCL) climbed 2.15% to ₹318.80, while Hindustan Petroleum Corporation (HPCL) rose 1.10% to ₹406.20.

Airline stocks also traded in positive territory. InterGlobe Aviation, which operates IndiGo, rose 0.46% to ₹4,862.40, while SpiceJet added 0.39% to ₹13.01. Aviation companies are among the biggest consumers of fuel, making crude price movements a key factor for operating costs.

Brent Extends Losing Streak

Global crude oil prices remained under pressure as markets assessed the possibility of easing geopolitical tensions in West Asia.

Brent crude declined for a fifth consecutive session, falling below $79 per barrel and trading near a three-month low. U.S. benchmark West Texas Intermediate (WTI) crude hovered around $76 per barrel.

The decline marks the longest losing streak for Brent crude in nearly 10 months and reflects expectations that additional oil supplies could enter the market if diplomatic negotiations progress.

Focus On U.S.-Iran Developments

Sentiments among investors have been positive as there have been rumors that the United States and Iran may enter into an interim deal that will help lift the ban on the latter’s oil shipments.

The potential deal will further allow for the reopening of the strategically located Strait of Hormuz, one of the most vital channels for oil shipments.

With the rise in supply becoming increasingly evident, fears regarding a disruption to the international energy landscape have been assuaged, resulting in a sharp drop in crude prices over the past few weeks.

Nevertheless, traders have kept a close watch on progress being made towards the resumption of normal activity in the oil channel, which would be indicative of the speed at which the situation returns to normal.

The decline in crude oil prices has helped to provide a lift to industries that have a heavy dependence on fuels and materials, allowing a number of oil sensitive stocks to do well.