18 June 2025 | Market Resilience | Oil Prices, Geopolitical Tensions, Sectoral Movement
Even as global crude oil prices spiked sharply on June 18, 2025, Indian stock markets witnessed remarkable resilience among oil-sensitive sectors. With Brent crude surging nearly 5 percent to touch $76.8 per barrel—the highest since February 11—market watchers expected significant downside in refining, paint, and petrochemical stocks. However, in a surprising twist, most of these stocks held firm or even traded in the green. As the Iran-Israel military conflict entered its sixth day, equities reflected a calculated investor response rather than panic selling, signaling expectations of temporary disruption rather than sustained economic fallout.
Highlights
Brent crude hit $76.8 per barrel—its highest level since February 2025.
Escalating Middle East conflict sparked fears of supply disruption.
Equity markets showed resilience despite the surge in oil prices.
Paint, OMC, and refinery stocks remained largely firm in morning trade.
Also Read : Markets Open Cautiously Higher on June 18; Nifty, Sensex Gain Amid Global Headwinds
Refiners and OMCs Trade Strong Despite Oil Spike, Defying Historical Trends
Ordinarily, rising crude prices hurt downstream oil firms and refiners, as higher input costs compress margins in a regulated price environment. However, on June 18, Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL), and Indian Oil Corporation (IOC) all traded in the green, bucking the expected trend. Analysts attribute the strength to strong retail demand, healthy refining margins in the prior quarter, and expectations of minimal immediate price pass-through due to government buffer mechanisms. Additionally, the government’s reluctance to revise petrol and diesel prices in a pre-budget quarter may be aiding sentiment in the sector.
Highlights
BPCL, HPCL, and IOC remained firm despite crude oil nearing $77.
Refining margins and policy cushioning may be supporting stock prices.
Investors betting on limited fuel price hikes ahead of Union Budget.
Retail demand remains strong, buffering margin pressures.
Upstream Energy Stocks Benefit as ONGC, Oil India Gain on Price Tailwinds
In contrast to refiners, upstream energy companies like Oil and Natural Gas Corporation (ONGC) and Oil India typically gain from higher crude prices, which directly boost realisations and revenue from exploration and production activities. ONGC and Oil India both saw modest gains of around 1 percent during early trade. Investors responded positively to the pricing tailwind despite uncertainties around export policies and demand constraints in the Asian energy markets. Global forecasts indicating constrained supply amid continued conflict added further short-term upside potential to these counters, as institutional buying returned selectively.
Highlights
ONGC and Oil India gained up to 1% in early trade.
Higher crude prices support upstream earnings and revenue visibility.
Rising institutional interest observed amid geopolitical premium.
Exploration sector benefits from ongoing supply-side concerns.
Paint Stocks Show Surprising Stability as Input Cost Fears Ease Temporarily
Paint manufacturers, highly sensitive to crude-linked inputs such as solvents and resins, are typically among the first to react negatively to oil price spikes. Yet, on June 18, leading names like Asian Paints and Berger Paints edged higher by around 0.5 percent, defying input cost concerns. Analysts suggest that strong pricing power, brand equity, and robust post-summer demand for decorative paints have helped insulate these companies from short-term volatility in raw material prices. Furthermore, hedging strategies and existing inventory buffers may be mitigating immediate cost escalation. Investors appear to be pricing in only a short-lived spike in oil.
Highlights
Asian Paints and Berger Paints rose 0.5% despite crude spike.
Paint companies may benefit from inventory hedging and pricing power.
Strong seasonal demand could offset input cost volatility.
Raw material cost pass-through seen as manageable in short term.
Escalating Iran-Israel Tensions Drive Oil Price Volatility, Trigger Diplomatic Concerns
The root cause of Brent’s surge lies in rapidly escalating tensions between Iran and Israel, which have entered a violent and unpredictable sixth day. On June 18, Iran’s Supreme Leader Ayatollah Ali Khamenei declared “The battle begins” on social platforms, coinciding with reports of Israeli missile strikes on Tehran. Simultaneously, explosions were reported in Tel Aviv amid Iranian retaliatory missile threats. Former U.S. President Donald Trump, who is expected to run again in 2026, convened his national security team and reportedly reviewed military options targeting Iranian nuclear infrastructure. These developments have spooked energy markets globally, as traders anticipate potential supply chain disruptions through the Strait of Hormuz.
Highlights
Middle East conflict intensifies with Israeli strikes and Iranian retaliation.
Crude market fears disruption of supply via Strait of Hormuz.
Trump reportedly considered strikes on Iranian nuclear sites.
Explosions reported in Tel Aviv escalate global market anxiety.
Market Cautiously Monitoring Long-Term Impact of Sustained Oil Price Surge
Despite short-term resilience, market strategists remain cautious about the longer-term ramifications of sustained crude price elevation. Sectors such as aviation, petrochemicals, logistics, and fertilisers could face margin pressure if Brent remains elevated or crosses $80 in coming sessions. While stocks held up on June 18, prolonged geopolitical conflict may gradually erode earnings outlooks, especially for companies with high energy dependency and limited pricing power. Analysts warn that unless offset by government support, demand-side inflation or foreign institutional outflows may emerge as second-order effects. The next key inflection point is expected from OPEC’s emergency response and policy communication from the Indian Ministry of Petroleum.
Highlights
Sustained crude above $80 could impact margins across energy-intensive sectors.
Analysts highlight risks to aviation, logistics, and fertilisers if prices stay high.
Government intervention or fuel subsidies may become necessary.
Market awaits signals from OPEC and India’s energy ministry on policy response.
