Global crude oil prices experienced a dramatic drop of more than 8% overnight, falling below the $100-a-barrel mark and settling near $95 for Brent crude and $88 for West Texas Intermediate (WTI). This sharp decline triggered a rally in oil-sensitive stocks on Thursday, November 5, as investors reacted to the potential benefits of lower input costs.
Shares of state-run oil marketing companies (OMCs) such as Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Petroleum Corporation Ltd. (BPCL), and Indian Oil Corporation (IOC) surged around 5%. Other sectors, including aviation, tyres, and paints, also saw gains. JK Tyre climbed 5.6% to ₹351.50, InterGlobe Aviation (parent company of IndiGo) rose 5.04% to ₹5,400, and Asian Paints advanced 4.44% to ₹2,525.70. Apollo Tyres, CEAT, Kansai Nerolac Paints, and Berger Paints also posted significant gains.
The decline in crude prices was attributed to the Democrats' sweeping victories in the US midterm elections, which fueled expectations of a potential end to the war with Iran. US Vice President JD Vance and Senate Minority Leader Chuck Schumer both acknowledged the role of voter frustration over the war in the Republican defeat. Additionally, remarks by US President Donald Trump suggested no immediate plans to intensify attacks on Iran, further easing market tensions.
Despite the drop in crude prices, upstream oil producers like Oil India and ONGC faced pressure, with their shares falling 3.07% and 1.60% respectively. Analysts at BOK Financial Securities noted that Democratic control of Congress could constrain US military spending and increase the likelihood of an earlier end to the conflict. Meanwhile, fresh US inventory data indicated continued tightness in petroleum product supplies, with distillate inventories falling below 100 million barrels, their lowest level since 2003.