Oil‑sensitive stocks fell on Wednesday, 28 October, as global crude prices climbed above $116 per barrel, heightening concerns over a potential escalation in West Asia. Investors focused on the risk that the United States has warned West Asian countries to prepare for military escalations after the upcoming U.S. midterm elections, which could affect oil supply dynamics through the Strait of Hormuz. The elevated geopolitical tensions and the subdued performance of domestic indices, with the NIFTY50 and SENSEX trading in negative territory, amplified selling pressure on heavyweight IT stocks.

The rise in crude prices directly impacted sentiment among Indian investors, as higher oil costs raise raw‑material expenses for oil‑sensitive companies and squeeze their margins. NSE data showed the Nifty Oil & Gas index falling 2.2% to an intraday low of 10,301.15 points, down from 10,536 points at the previous close. Leading laggards included HPCL, Aegis Logistics, BPCL, Chennai Petroleum, Indian Oil, ONGC, and Petronet LNG, all posting significant intraday losses.

At 12:43 pm IST, the Nifty Oil & Gas index was trading 1.8% lower at approximately 10,341 points during the session. The sectoral decline was mirrored by individual stocks: Aegis Logistics fell 6.1% to ₹1,126, Hindustan Petroleum 4.2% to ₹338.80, ONGC 2.9% to ₹223.10, Aegis Vopak Terminal 3.1% to ₹227.80, Bharat Petroleum 2.9% to ₹286.90, Indian Oil 1.9% to ₹129.20, Asian Paints 1.6% to ₹2,239.10, Berger Paints 1.1% to ₹458.10, Apollo Tyres 1.3% to ₹378.05, and JK Tyre 1.3% to ₹299.45.

Brent crude for the December contract rallied about 2% to an intraday high of $116.06 per barrel, up from $113.88 at the previous close, according to Investing.com data. Over the past five days, Brent prices have risen 6.5%, and they have increased 16% in the last month, 37% in the last three months, and 11% in the last six months. The volatility in crude prices has a direct effect on companies that use oil as a raw material, impacting their production costs and profitability.

The sector most affected by the oil price surge includes paints, tyres, and oil marketing companies, whose production processes rely heavily on energy inputs. Higher energy costs translate into tighter margins for these firms, as the cost of raw materials rises. The market’s reaction to the oil price rally underscores the sensitivity of these industries to global commodity price movements.

A WSJ report indicated that U.S. and Israeli officials are reportedly preparing for potential military strikes on Iran following the midterm elections, aiming to pressure the country into a peace deal. The report cited diplomatic and military communications suggesting a new round of heavy combat operations against Iran, raising the risk of a major escalation in West Asia. The White House has not commented on the existence of any sensitive military plans, leaving the situation uncertain for market participants.