Bank of America finds that daily swings in crude oil prices now explain a growing share of the daily stock moves at chemical and paint makers. The shift followed disruptions to shipping through the Strait of Hormuz earlier this year.
Oil no longer moves only oil stocks. A Bank of America note found that roughly 35% of daily share-price variation at LyondellBasell (LYB), Dow (DOW) and CF Industries (CF) has been statistically tied to crude since the conflict around Iran intensified, up from about 12% beforehand. For LyondellBasell, the figure reached 40%.
Hormuz disruption reshapes the oil equation
The scale of the disruption is hard to overstate. Hormuz oil flows averaged just 4.9 million barrels a day in the second quarter of 2026, down from 21.6 million barrels a day in the fourth quarter of 2025, according to the EIA. As attacks on tankers resumed, Brent crude hit $105 a barrel on July 23.
Chemical and paint stocks now trade like oil plays
U.S. chemical makers rely more on cheaper natural gas liquids than foreign rivals do, so pricier crude can shift the cost curve in their favor. That helped LyondellBasell's correlation with oil rise from 0.38 to 0.63, and Dow's from 0.32 to 0.58. Paint makers moved the opposite way: oil prices explained under 1% of Sherwin-Williams' daily moves before the disruption, then about 39% afterward, with a negative link, since rising feedstock costs squeeze margins before price hikes catch up. PPG, RPM International, Axalta and Ecolab show the same pattern.
China and US supply shifts cushioned the shock
China's crude imports were not spared. China's crude imports fell to 8.1 million barrels a day in the second quarter, a 32% decline from the prior quarter, dropping below 8 million barrels a day in May and June for the first time since 2016. U.S. producers stepped into the gap: U.S. crude and petroleum product exports hit a record 13.6 million barrels a day in April, up 15% from the previous high a month earlier.
BofA does not see the current raw-material inflation as systemic. Coatings makers passed through roughly 90% or more of it through price increases within three months, and BofA's model now points to about 6% year-over-year inflation in the second half, down from an earlier 7.6% forecast. The bank rates Axalta, Ecolab, PPG and RPM International as buys, arguing some of these stocks may already be pricing in more oil pain than their underlying businesses have to absorb.
Source: TheStreet
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