Bank and Oil Stocks to Remain in Focus as Crude Prices Rise Following US Strikes in Iran

Global Oil Prices Surge Following US Strikes in Iran

The Indian stock market is expected to remain in focus on Friday, with bank and oil marketing company shares under the spotlight after crude oil prices rose following fresh US strikes in Iran. The Brent crude futures climbed approximately 2 percent on Thursday, raising concerns over a prolonged conflict and uncertainty over shipping flows through the Strait of Hormuz.

At around 4 pm IST, global benchmark Brent crude was trading 1.98 percent higher at USD 94.08 a barrel, after declining sharply in the previous session. This development has significant implications for the Indian economy, which imports a substantial portion of its crude oil requirement. The country's reliance on imported crude oil makes it vulnerable to fluctuations in global oil prices.

The crisis in the Middle East has already had a profound impact on the global oil market. Since the conflict began on February 28, Iran has effectively halted nearly all non-Iranian shipping into and out of the Gulf through the Strait of Hormuz, disrupting nearly a fifth of global oil and liquefied natural gas (LNG) flows. This disruption is likely to put pressure on oil marketing companies, which may see their refining and marketing margins impacted by higher crude oil prices.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

In the previous session on Wednesday, shares of Hindustan Petroleum Corporation settled 1.23 percent higher at Rs 402.90 per share on the NSE. Bharat Petroleum Corporation gained 0.84 percent, while Indian Oil Corporation Ltd declined up to 5 percent. Banking stocks are also likely to remain in focus after the Bank Nifty index settled lower in the previous session.

Higher crude oil prices are seen as negative for the Indian economy, as they can increase inflationary pressures, widen the current account deficit, and raise borrowing costs. These factors may weigh on the banking sector, making it a key area of focus for investors on Friday. The US military's strikes in Iran have further escalated tensions in the region, with Kuwait reporting a missile and drone attack on Thursday.

The US military's action followed earlier strikes carried out this week, including the shooting down of four Iranian one-way attack drones near the Strait of Hormuz. The incident has raised concerns over the fragile ceasefire situation in the region and may continue to impact global oil prices in the coming days.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline