Shares of Indian sugar companies Ugar Sugar Works Ltd., Shree Renuka Sugars Ltd., KM Sugar Mills Ltd., Balrampur Chini Mills Ltd., Dhampur Sugar Mills Ltd., Praj Industries Ltd. Shree Renuka Sugars Ltd., Bajaj Hindusthan Sugar Ltd. and others surged up to 18% on Wednesday, amid the broader market sell-off.

Global sugar prices spiked, triggered by a sharp rise in crude oil prices due to the situation in West Asia.

An increase in oil prices might support further transition to ethanol. As a result, major sugar-producing countries could shift more towards ethanol production, instead of sugar. This could lead to a tightening of supplies of sugar, with demand remaining intact, ultimately increasing the prices of sugar.

Additionally, sugar is also used in biofuel production, and its demand can get a boost when crude moves higher.

In India, the government has mandated the sale of petrol with up to 20% ethanol across all States and Union Territories from April 1, 2026. This move makes E20 fuel the standard grade available to motorists nationwide.

Ethanol is made mainly from sugarcane and grains such as maize and rice. It is produced domestically and burns cleaner than pure petrol.