Most Asian markets fell over 1 per cent, with South Korea’s Kospi plunging 7.2 per cent — its worst session in 19 months. European markets fared worse, with key indices in Germany, France and Italy sliding more than 3 per cent amid fears of a widening regional war.
Indian markets were shut on account of Holi, but early signals were weak. SGX Nifty futures at GIFT City dropped 2.5 per cent to 24,380, indicating a gap-down opening when domestic trading resumes on Wednesday.
The risk-off mood gathered pace after reports that Iran had closed the Strait of Hormuz — a critical artery for global energy trade — and warned of action against vessels attempting to transit the route.
According to Kpler data, over 14 million barrels per day passed through the Strait last year, accounting for nearly a third of global seaborne crude exports.
Brent crude surged as much as 8 per cent intraday to $84 per barrel, while US crude also extended gains. Gas prices jumped more than 30 per cent over two sessions, stoking fears of renewed inflationary pressures worldwide.
Gold, a traditional safe haven during times of geopolitical stress, climbed for a fifth straight session to a four-week high.
Experts said that with no clear timeline for de-escalation, investors were bracing for heightened volatility. Any further disruption to West Asia energy supplies could complicate the global inflation and interest rate trajectory, just as economies were adjusting to trade tensions and slowing growth, they said.
For India, the stakes are high given its heavy reliance on imported energy. The country imports over 80 per cent of its crude oil requirements, with more than half sourced from the West Asia. Six of India’s top 10 crude suppliers are from the region. Besides oil, Qatar and the UAE are key LNG suppliers, raising concerns after reports that Qatar had shut its largest gas plant.
Kaushik Das, chief economist (India) at Deutsche Bank, flagged growth and policy risks. “Typically, a 10 per cent increase in global oil prices (if fully passed through) can lower growth by 10–20 basis points. Higher oil prices, if transmitted to consumers, would weigh on private consumption, which accounts for nearly 60 per cent of GDP,” he said.
