Crude oil stocks: Chennai Petroleum, Apollo Tyres, IGL fall as Brent crude tops $97

Crude oil-linked stocks came under pressure in morning trade on Monday, September 7, as global crude prices climbed above $97 per barrel amid renewed concerns over supply disruptions through the Strait of Hormuz.

The rebound in oil prices came after a brief pullback last week, when crude slipped towards $93 per barrel as traders booked profits. The latest move higher has brought oil-sensitive stocks back into focus, with higher crude prices raising concerns over input costs and margins.

The Nifty Oil & Gas index fell 0.41% to an early low of 11,141.40, compared with 11,187.65 at the previous close. The broader market was also trading lower, with elevated oil prices and weakness in IT stocks weighing on sentiment.

Oil marketing companies (OMCs), aviation, tyre and paint stocks were among those under pressure. Higher crude prices can increase fuel and raw-material costs for these businesses, potentially weighing on margins if the rise cannot be passed on to customers.

Oil-linked stocks in focus

Chennai Petroleum Corporation fell 2.4% in intraday trade, while Apollo Tyres declined 2.1%. Indraprastha Gas was down 1.8%, followed by Indian Oil and HPCL, which slipped 1.1% and 1%, respectively. BPCL fell 0.7%.

Among other crude-sensitive stocks, MRF declined 0.9%, while Asian Paints and InterGlobe Aviation, the operator of IndiGo, were down 0.6% each. Reliance Industries bucked the trend, gaining 0.4%.

Despite the day's declines, some stocks have delivered strong returns over the longer term. Chennai Petroleum has gained 68.5% so far this year, while its five-day return stands at 4.3%. Indraprastha Gas is up 3.4% over five sessions, although the stock remains down 18.8% year to date.

OMCs have remained under pressure on a year-to-date basis, with HPCL down 29%, while Indian Oil and BPCL are both lower by 17.6%. Asian Paints has declined 8.5% so far this year, while Apollo Tyres and MRF are down 14.5% and 14.9%, respectively.

Higher oil prices are also a broader concern for energy-importing economies such as India. HSBC analysts said such countries could continue to see volatility as rising import bills put pressure on external balances and inflation.

Why are crude oil prices rising?

Brent crude rose 1.06% to $97.31 per barrel in early trade on Monday, compared with $96.28 at the previous close. Oil prices have risen more than 7% over the past five trading sessions and are up over 16% in the last month. Over three months, crude prices have gained 4.5%.

The Indian crude basket has also moved sharply higher, rising to $97.32 per barrel in September from $90.19 in August and $82.04 in July.

The latest rally has been driven largely by geopolitical concerns surrounding the prolonged US-Iran conflict and the possibility of further disruption to crude shipments through the Strait of Hormuz.

“Brent is trading near $96.50 this morning after a rise of about 10% last week, and the weekend has added a new dimension to the conflict — it is now being fought at sea,” said Anindya Banerjee, Head of Research – Currency, Commodities and Interest Rates at Kotak Neo.

The escalation followed US strikes on three Iranian oil tankers anchored off Iran's coast on Saturday, according to Banerjee. The strikes came after Tehran fired ballistic missiles at American warships, including an aircraft carrier. Iran's Revolutionary Guard subsequently claimed attacks on three tankers using what it described as an unauthorised route through the strait, along with vessels affiliated with the US.

Concerns over the Strait of Hormuz have since intensified. Banerjee noted that Iran's top security official said on Sunday that Tehran would declare a restricted zone in the coming days, beginning at the US naval blockade line and extending into the Gulf. Iran has also said that a transit corridor agreed with Oman would be signed shortly, with its entry and exit points under Iranian control.

Adding to the supply concerns, OPEC+ producers decided on Sunday to keep October output at September levels, meaning there will be no additional barrels coming from the group.

The physical market is also showing signs of tightening. “The product market tells you where the squeeze is sharpest,” Banerjee said, pointing to diesel futures, which have risen around 20% in a month and have nearly doubled from a year ago.

He also highlighted that US diesel inventories remain 14% below the five-year average, while US refineries have operated above 95% of capacity for 12 consecutive weeks — the longest such stretch since 2000. The front-month Brent contract is also trading at a premium of around $20 to the October 2027 contract, pointing to strong demand for barrels available immediately.

Banerjee expects Brent to retain a positive bias, with $90 emerging as a strong floor and $102 acting as a major resistance level. A break above $102, he said, could open the way for crude to move towards $115-$116.

For Indian companies exposed to crude prices, the key concern will be whether the latest increase is sustained. A prolonged rise in oil costs could put further pressure on fuel expenses, raw-material costs and margins across aviation, tyres, paints and other oil-sensitive industries.

Also Read - NSE IPO effect: SBI, NIACL, GIC Re, Bank of Baroda, IFCI in focus as SEBI clears NSE's ₹30,000 crore IPO