Crude oil prices surged to their highest level in over 6 weeks on Thursday, July 23, after escalating geopolitical tensions in the Middle East raised concerns over potential supply disruptions. Brent crude climbed above $96 per barrel following fresh US strikes on Iran and continued attacks on oil tankers in the Red Sea.
The rally in oil prices triggered mixed reactions across Indian oil-linked stocks. While upstream companies such as ONGC and Oil India (OIL) traded higher, oil marketing companies (OMCs), aviation, tyre and paint stocks remained under pressure as investors assessed the impact of rising crude prices on different business models.
Upstream companies are engaged in the exploration and production of crude oil and natural gas. As crude prices increase, these companies typically realise higher revenue for every barrel of oil they produce, provided production costs remain largely unchanged.
Reflecting this trend, ONGC share price traded 0.29% higher at ₹252.62, while Oil India share price gained 1.7% to ₹458.80 during Thursday's session.
For downstream companies such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL), crude oil is the primary raw material. A sharp rise in crude prices increases input costs, and if fuel prices cannot be raised immediately, refining and marketing margins may shrink.
The impact was evident in the June quarter results. HPCL reported a consolidated net loss of ₹12,265 crore, while BPCL posted its first quarterly loss in 15 quarters as higher crude costs outweighed refining gains despite revenue growth.
Higher crude prices also affect sectors that rely heavily on petroleum derivatives. Paint manufacturers face rising raw material costs, while airlines see aviation turbine fuel (ATF) expenses increase, putting pressure on profitability. Asian Paints shares traded lower, while InterGlobe Aviation (IndiGo) remained largely flat during the session.
The NIFTY Oil & Gas index traded 0.27% lower during the session. HPCL shares fell around 3%, IOC slipped marginally, while BPCL traded slightly higher despite reporting weak quarterly earnings.
Crude oil price movements do not impact all companies equally. While upstream producers generally benefit from higher realisations, OMCs and oil-dependent sectors often face margin pressure when input costs rise faster than selling prices. For investors, understanding these differing business models can help explain why oil-linked stocks frequently move in opposite directions during periods of elevated crude prices.
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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
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Published on: Jul 23, 2026, 12:15 PM IST
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