Quote on Sectoral impact of crude oil price spike by Rajeev Sharan, Head of Research, Brickwork Ratings
Below the Quote on Sectoral impact of crude oil price spike by Rajeev Sharan, Head of Research, Brickwork Ratings
"With Brent holding above USD 100 a barrel, the highest since late July, the sectoral pinch is becoming clearer, and this is a supply-driven move rather than a demand story. The hit is largest in aviation, where jet fuel is roughly a third to 40% of operating costs at the recent price levels, followed by paints, tyres and petrochemicals, where crude-linked inputs form a large share of the raw material bill and margins compress quickly. Logistics, cement and parts of FMCG feel it through freight and packaging, while oil marketing companies are squeezed when they cannot fully pass costs to the pump. Upstream producers, by contrast, gain from stronger realisations.
For an economy importing over 85% of its crude, estimates suggest every USD 10 a barrel adds about USD 13-14 billion to the yearly import bill and can lift retail inflation by 30 to 50 basis points. From a credit view, a brief spike is usually absorbed; the real risk is oil staying elevated from here, which would pressure margins in exposed sectors, with smaller, leveraged firms feeling it first."
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