Business
oi-Ashish Rana
The Indian stock exchanges saw a massive sell-off on Wednesday as the key BSE Sensex index fell by almost 1,800 points after US President Donald Trump hinted that the nuclear deal with Iran has basically come to an end. The renewed geopolitical tensions created uncertainty among global investors, pushing up crude oil prices and causing a sell-off across broader-based equities markets.
Indian stock indices, BSE Sensex and Nifty 50, fell sharply on Wednesday, down nearly 1,800 points and over 2% respectively, following US President Trump’s suggestion that the Iran nuclear deal has ended, increasing geopolitical uncertainty and crude oil prices.
By 2:35 pm, the BSE Sensex had fallen 2.1% to 76,570.47, while the Nifty 50 declined 2.03% to 23,902.64. If the losses continue at the close, it would be the largest percentage decline for the leading Indian indices in over two months, according to Reuters.
Trump’s Remarks Trigger Global Market Jitters
Investor sentiment turned sharply negative after Trump declared that the understanding between the United States and Iran had effectively come to an end, raising fears of another round of military escalation in the Middle East.
The latest development follows fresh US strikes on Iran on Tuesday. Washington said the attacks were launched in response to Iranian action against ships passing through the strategically important Strait of Hormuz, one of the world’s busiest energy shipping routes.
Speaking at a NATO summit in Turkey on Wednesday, Trump dismissed hopes that the ceasefire remained intact.
“As far as I’m concerned, it’s over,” Trump said when asked whether the truce was still in place, adding, “It’s just a waste of time dealing with them”.
He further remarked, “I’ll let our wonderful negotiators keep talking if they want, but I don’t see it. I don’t like these people.”
His comments reignited concerns that the fragile peace memorandum between Washington and Tehran had broken down, increasing fears of prolonged conflict in the region.
Strait Of Hormuz Remains At The Centre Of The Crisis
Strait of Hormuz is now again a flash point. A large percentage of the world’s crude oil exports pass through this narrow waterway and any disruption would be a serious concern for global trade and energy supplies.
Although maritime traffic had resumed cautiously after the United States and Iran signed a peace memorandum last month, Tehran has maintained that there will be no return to the pre-war arrangement that allowed unrestricted passage through the strait.
Iran has insisted that it will control movement through the waterway, charge transit fees and take action against vessels that fail to follow its authorised routes.
Under the 14-point US-Iran memorandum, Iran and Oman, which border the Strait of Hormuz, are required to hold talks with other Gulf nations to determine the future administration and maritime services governing the strategic passage.
Oil Prices Jump As Investors Fear Supply Disruptions
The renewed doubt over the US-Iran conflict also spooked oil prices up around the world, adding to the pressure on financial markets.
Brent crude futures climbed $3.82, or 5.15%, to $77.98 a barrel, while US West Texas Intermediate (WTI) crude gained $3.70, or 5.25%, to $74.14 a barrel by 0832 GMT. Both indexes reached new all-time highs on the 23rd.
The rally followed Trump’s statement that the memorandum meant to end the standoff with Iran was “over”, raising fears that Middle East tensions could impact global oil supplies. Crude prices already had risen by about 3% on Tuesday following the United States’ lifting of the general licence permitting sales of Iranian crude.
The high price of crude oil also raises concerns for markets as it can lead to inflation, bring up cost of imports for oil-dependent economies like India and affect corporate profitability, further dampening investor sentiment.
