Mumbai: Shares of Oil marketing companies, local airlines, tyre firms and paint companies fell on Monday after major rebel attack hits Saudi oil facilities.
While tyre companies use a lot of crude intermediates, paint companies use crude derivatives, and hence rising oil prices increase their input costs. Airline shares were trading lower on the worries that surge in crude may lead to hike in jet fuel prices.
Among oil marketing companies, shares of Bharat Petroleum Corp Ltd fell 6%, Hindustan Petroleum Corp Ltd 5.8%, Indian Oil Corp Ltd 3.5%.
In Aviation stocks Interglobe Aviation ltd fell 3%, SpiceJet Ltd 4.5%. Tyre companies like Apollo Tyres Ltd fell 1%, Ceat Ltd 1.5% and MRF Ltd 1%.
Paint companies such as Asian Paints fell 2.55%, Kansai Nerolac Paints Ltd fell 2.4%, Berger Paints India Ltd 1.8%, Shalimar Paints Ltd 2.1%.
Petrol and diesel prices are directly linked to international crude rates as India's imports about 70% of its crude requirements. As of now petrol, diesel rates are selling at the same rate as of end-August. Prices are still lower than what was in mid-July, Mint reported.
"We have a Brent price estimate of $65/bbl for FY20 and YTD average is in line. We await official Saudi updates and further details. A sudden spike in oil prices is negative for OMCs (IOCL, BPCL, HPCL). Higher oil prices are positive for GAIL. A $65-70/bbl range is ideal for ONGC and Oil India", according to Emkay Research report.
Upstream companies like Oil & Natural Gas Corp Ltd rose 2.1%, Gail India Ltd 1.3%.
There was a major drone attack on two oil facilities in eastern Saudi Arabia early morning yesterday by Yemeni Houthi rebels, causing a severe fire. The Abqaiq and Khurais oil processing plants have capacities of 7mb/d and 1mb/d, respectively.
According to Emkay report, supplies have been disrupted, with two citing a 5mb/d impact. This is over half of the Kingdom’s current production of 9.8mb/d and 5% of global oil supplies. Saudi officials have stated that the fire has been controlled although video and satellite footage show it is major.