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Geopolitics · Global Markets · Iran Conflict · Oil Prices
The ongoing conflict between the US, Israel, and Iran, which began on February 28, has significantly impacted global markets, with crude oil prices surging 39% within nine days and global stock indices, including the BSE Sensex and MSCI World Index, experiencing drops of 5% and 4% respectively.
Initially, market reactions were muted, similar to past West Asian conflicts, but the escalating threat to the Strait of Hormuz, which transports 20% of the world's oil, caused crude to spike past $100 per barrel. This current surge in Brent crude prices is sharper than the 22% rise seen during the Russia-Ukraine war in February 2022, according to Mint.
Unlike previous conflicts where global markets often showed resilience, the current situation has "punctured" the belief that oil flows would remain undisrupted. While oil and gas stocks rose 10% after the Russia-Ukraine war, the Nifty Oil and Gas Index trended downwards in the current conflict, suggesting a different outlook.
Gold, a traditional safe haven, saw muted initial movement due to prior surges but is expected to rise if the conflict persists.
