Why Crude Oil Surged on Monday: Which Sectors Could Be Impacted; IndiGo Crashed Over 7%

Why Crude Oil Prices Surged on Monday? 

The surge stems primarily from the closure of the Strait of Hormuz. The threat of Iranian missile and drone attacks has all but stopped tankers from travelling through the strait, which is bordered in the north by Iran, carrying oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran. Roughly 15 million barrels of crude oil, about 20 per cent of the world's oil, is typically shipped every day through the Strait of Hormuz.

Iran, Israel and the United States have also attacked oil and gas facilities, exacerbating supply concerns. Iraq, Kuwait and the UAE have cut their oil production as storage tanks fill due to the reduced ability to export crude.

President Trump's statements rejecting negotiations with Iran have fuelled expectations of prolonged disruption, pushing prices to levels unseen since 2022.

Indian Sectors Likely to be Impacted by Surge in Crude Oil Price 

The surge in crude oil prices has significant implications, particularly for those who rely heavily on petroleum products either as fuel or as raw materials. Higher crude prices usually flow through the economy. They raise operating costs and reduce profit margins. In some cases, companies may have to pass on these rising prices to consumers.

Aviation
Aviation is typically the first sector to feel the pressure during oil price spikes. Additionally, the war has forced aviation companies to halt operations in the Middle East and take longer routes, which results in high fuel consumption. Aviation turbine fuel (ATF), which is derived from crude oil, accounts for around 20 per cent of airline operating expenses. A sharp rise in crude prices directly increases fuel costs for airlines. This can squeeze profit margins and may lead to higher airfares.

Oil Marketing Companies (OMCs)
Oil marketing companies (OMCs) also face margin pressure due to rapid crude price increases. Higher crude prices raise the cost of refining and selling petroleum products. Retail fuel prices are not always adjusted immediately. We have seen that despite crude oil prices going up, the Indian Government has not raised petrol and diesel prices in India. This lag compresses margins for downstream oil companies.

Paints and Chemicals
Additionally, paints and chemicals are also vulnerable to rising crude prices. Petrochemical inputs are linked to crude oil prices, meaning that a rise in crude can increase production costs and weigh on profitability.

Auto
Within the auto sector, tyre manufacturers and auto component makers face the most cost inflation. Higher raw material costs impact margins unless companies are able to pass on these increases to consumers.

Fertilisers
Fertiliser is another one that faces rising energy costs. Production of ammonia and urea is dependent upon natural gas and other energy inputs, which are linked to crude oil prices. Natural gas and LNG prices commonly rise with crude, adding pressure to production costs. Additionally, after being the target of an Iranian drone attack, Qatar halted the production of LNG at the largest export facility in the world, which also supplied gas to India.

Logistics and Transportation
Lastly, increased diesel prices have a direct impact on logistics and transportation firms. One of the biggest running costs for freight and transportation companies is fuel. As a result, rising diesel prices may raise freight rates and have an impact on supply chains, which could raise consumer goods prices throughout the economy.

Nifty Auto Down by Over 4% 

All the above factors have raised fears of higher input costs and inflation. As of 10:15 AM, all indices are trading in the red. Sectors considered safe and growth investments, such as automobiles and BFSI, have also fallen substantially. Nifty Auto is down 4.11 per cent while Nifty Bank and Nifty Financial Services are down 4.02 and 3.60 per cent, respectively.

Crude Sensitive Stocks Fell on Monday 

Other crude-sensitive companies have also dropped sharply. Aviation, Oil Marketing Companies, Paints & Chemicals, Fertilisers, and Logistics & Transportation are the worst-hit firms. Among the biggest losers in the Nifty 50 are InterGlobe Aviation (IndiGo), State Bank of India, Shriram Finance, Maruti Suzuki, Tata Motors, Asian Paints, and Tata Steel.

Top 10 Losers in Nifty 50 (March 09, 2026 - 10:15 AM)

Impact on GDP and Trade

The wider economy may be affected if crude oil prices continue to rise above US 100 per barrel, in addition to corporate profits and equity markets. India is extremely susceptible to changes in global prices because it imports almost 85 per cent of its crude oil needs. The nation's import bill rises with rising crude prices, which can exacerbate the trade deficit and strain the current account balance. According to economists, India's GDP growth could drop by about 0.5 per cent for every USD 10 increase in crude oil prices. Therefore, persistently high oil prices may have a negative impact on fiscal stability and economic growth in addition to increasing inflationary pressures.

Additionally, at USD 115 per barrel, India's annual import bill could swell if these prices persist, drastically tilting the trade balance into the red. India’s trade deficit is expected to widen, as it imports around 85 per cent of its oil. Indian Rupee may come under pressure and is likely heading towards record lows against the USD. This, in tandem, may hamper imports and make goods and services more expensive. 

Disclaimer: The article is for informational purposes only and not investment advice.