Following US and Israeli strikes on Iran that killed Supreme Leader Ali Khamenei and prompted Strait of Hormuz disruptions, oil prices rose nearly 8% amid ongoing tensions. Indian markets shed Rs 6.35 lakh crore on Tuesday, with the rupee weakening on supply fears. Globally, the dollar strengthened as a safe haven while the yen and euro weakened.
The Middle East conflict intensified with Monday's strikes causing facility shutdowns and shipping disruptions in the Strait of Hormuz. Building on Monday's 7% oil surge to $82.40 per barrel, prices climbed nearly 8% further, stoking inflation fears and potential $100/barrel levels.
Indian markets extended losses on Tuesday, erasing Rs 6.35 lakh crore in value as Nifty and Sensex declined amid rupee depreciation and concerns over West Asian oil supplies—critical for 40-50% of India's imports—and safety of citizens in the region. Export sectors and crude-dependent industries bore the brunt, though upstream oil firms like ONGC and Oil India gained from higher prices; pharmaceuticals and metals held up better.
Internationally, Japan and Europe's energy exposure pressured the yen and euro, boosting the US dollar. Traders expect delayed Federal Reserve rate cuts due to resurgent inflation risks from the protracted conflict.
