Asian Paints, HPCL, MRF other crude-sensitive stocks jump up to 5% on Iran-US peace deal framework

The shares of crude-sensitive companies including OMCs, paint and tyre makers will remain in focus on Monday as oil prices dropped 5% to fall below $90 per barrel after Iran and the US agreed on a framework to end the month-long conflict in the oil-rich Middle East and open up the Strait of Hormuz.

US President Donald Trump announced on Sunday that the much-awaited agreement has been finalised. “The Deal with the Islamic Republic of Iran is now complete,” Trump wrote on Truth Social. He further said that the Strait of Hormuz, a vital route for global oil shipments that Iran had effectively closed for months, would reopen on Friday, while the US would end its blockade of Iranian ports. “Ships of the World, start your engines. Let the oil flow!” Trump wrote.

Iran meanwhile said that the newly announced agreement with the United States puts an “immediate end” to the countries’ war. “A permanent and immediate end to the war has been declared on all fronts, including Lebanon,” Iran’s Deputy Foreign Minister Kazem Gharibabadi said in televised comments in the early hours of Monday.

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Oil prices tumble 6% after Iran and US reach peace deal framework

This brought much-needed relief to oil prices, which had soared to as high as $120 per barrel earlier this year following the closure of the Strait of Hormuz, a narrow 33-kilometre waterway connecting the Persian Gulf with the Gulf of Oman that handles over 20% of the world’s daily oil and gas shipments. Brent crude futures declined around 5% to trade near $83 per barrel, while WTI Crude futures tumbled 6% to $80 per barrel on Monday morning.Also Read | Oil hits March lows as US, Iran agree peace deal. What are experts saying?

As a result of the raging war, the shares of oil marketing companies (OMCs) like Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC), paint makers like Asian Paints, Berger Paints and Indigo Paints, as well as tyre manufacturers like MRF and Apollo Tyres have dropped up to 22% this year so far, despite pockets of buying amid the seesaw political game in the Middle East.

Despite the renewed optimism, some caution is warranted. Analysts cautioned that even if the ceasefire holds, shipping through the Strait of Hormuz may take months to normalize. They added that any damage to energy infrastructure could further delay the recovery process. All of this can impact oil prices, and in turn, crude-sensitive stocks.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)