Oil prices: Brent futures tumble 16%; stocks to watch today

Oil prices: Brent oil futures on Intercontinental Exchange (ICE) crashed 16 per cent in Wednesday's trade to a low of $91.72 a barrel over previous day's close of $109.27 after US-Iran agreed to a two-week temporary ceasefire, with the first round of negotiations on an agreement to end the war is likely planned for Friday in Islamabad, Pakistan.

Oil prices fell as Iranian Minister of Foreign Affairs Seyed Abbas Araghchi said Iran would allow safe passage through the Strait of Hormuz for two weeks, following the request by the US for negotiations based on its 15-point proposal as well as announcement by POTUS about acceptance of the general framework of Iran's 10-point proposal as a basis for negotiation.

The US President Donald Trump in a social media post said he agreed to suspend the bombing and attack on Iran for a period of two weeks. 

"This will be a double sided CEASEFIRE! The reason for doing so is that we have already met and exceeded all military objectives, and are very far along with a definitive Agreement concerning long-term PEACE with Iran, and PEACE in the Middle East. We received a 10 point proposal from Iran, and believe it is a workable basis on which to negotiate," Trump said.

He added almost all of the various points of past contention have been agreed to between the United States and Iran, but a two week period will allow the agreement to be finalized and consummated. 

Stocks to watch today
SBI Securities in a note said the steep fall crude oil prices is positive for OMCs such as BPCL and IOCL, HPCL. Besides, it said airline stocks will be in focus, and so will chemicals, paints, tyre, plastics, etc while negative for upstream oil companies like ONGC, Oil India, and Vedanta. 

The near-term narrative has shifted toward a more constructive tone, with the potential for broad-based buying interest, particularly in sectors that had come under pressure amid elevated oil prices and geopolitical concerns, said  Ponmudi R, CEO at Enrich Money. 

Every $10 a barrel rise in crude prices over $90 a barrel would perhaps see 2-3 per cent decline in Nifty earnings, Bernstein reportedly said in a recent note. In another note, Bernstein had suggested scenarios on why Nifty target changes with the likely outome of US-Iran war. 

 ICICI Securities in a note on Tuesday said Nifty was more insulated from the Gulf crisis than the broader market, as  a single quarter of supply disruption in the 2026 oil markets may not significantly impact Nifty
earnings. 

However, geopolitical risks imply that the Nifty PE may remain subdued between 18-19 times in the near future, providing a one-year forward Nifty target of 27,000, the brokerage said. It had warned that if the Gulf conflict driven oil supply shock expanded much more beyond its base-case tenure of 2-3 months, there would be another round of de-rating for Indian equities from the current 18 times forward P/E for the Nifty coupled with sharp earnings downgrades as well.