The rising prices of crude oil is not only a matter of concern for the common man, but it can also create problems for many industries. Crude oil prices have risen nearly 20% since the fighting between the US, Israel and Iran began on February 28. Experts say that if the Strait of Hormuz remains closed for a long time, prices could reach $100 per barrel.
Impact on crude oil supply due to closure of Hormuz Strait
About 20% of the world’s oil supply passes through the Strait of Hormuz, primarily to India and China. It is reported that Iran has blocked the Strait of Hormuz, due to which shipping through this route has been banned. Due to this, the prices of crude oil have increased, and its effect is visible on the stock markets around the world. Experts say that interruption in oil and gas supply will affect many industries.
Expensive crude oil will create problems for many industries
Tile manufacturing companies in Morbi, Gujarat have stopped production. In the coming days, higher oil and gas prices may impact many other industries as well. Experts say that the rising prices of oil and gas will have the biggest impact on oil marketing companies, aviation companies, paint companies, tire companies, auto companies, chemical and fertilizer companies. However, oil producing companies will benefit.
Shares of oil companies have fallen since the fighting started
Expensive crude oil will have a direct impact on the margins of oil marketing companies like HPCL, BPCL and IOC. These companies do not immediately pass the burden of rising crude oil prices on to the customers. This means that they will have to bear the burden of increased prices themselves. This will affect their profits. This may cause a fall in their share prices. On March 6, IOC shares had fallen 2% to close at Rs 168. Since the fight began, the stock has fallen 10%. HPCL shares had fallen 3.14% on March 6. The stock has fallen 7.5% since the fighting began.
Pressure on airline stocks will also increase
Expensive crude oil is not good for airlines. ATF constitutes a major part of the total expenses of airlines. This means that if crude oil reaches $100, shares of companies like InterGlobe Aviation and SpiceJet may fall. InterGlobe Aviation’s stock had slipped 2.28% on March 6. The stock has fallen about 8.5% since the fighting began.
Chemical stocks may fall
The rise in crude oil prices will also affect paint companies. Due to this, the shares of Asian Paints, Berger Bentsen and Kansai Nerolac Paints may fall. Due to expensive crude oil, the problems of fertilizer companies will also increase. This means that shares of Chambal Fertilizers, Nagarjuna Fertilizers, GSFC, RCF, Supreme Petrochem, DCW, Deepak Nitrate, Bayer CropScience may fall.