New Delhi: India’s benchmark stock market indices Sensex and Nifty have closed in red for the last four trading sessions straight. As per Friday’s trading session at 2:30 pm, the 30 constituent index was down 668 points and hovered around 81,819 points. While, the broader index traded at 200 points lower at 25,047 levels. Both the market gauges have fallen by more than 3% in the last five days. So! Why has the market suddenly slipped into negative territory? Well! The most prominent reason is the fresh escalation in the ongoing war between Iran and Israel. After the former launched ballistic missiles on the former, Israel’s warning of retaliatory strikes on Iran’s oil and gas infrastructure has set India’s markets into a tailspin. So, lets see how will this geopolitical tension will impact India’s economy.
Israel’s Attack On Iran’s Oil And Gas Facility Will Impact India’s Economy In Following Ways
- Rise In Petrol, Diesel Prices:
If Israel attacks its foe’s oil and gas infrastructure, then, it will create supply shortage of international petroleum. This will further increase oil prices. In last five days, global oil benchmark Bent Crude prices have shot up around 10%. At the time of writing this article, its prices hovered near $77.49 per barrel.
India meets 85% oil demand from imports. Crude oil is imported in containers through vessels which sail on the Red Sea route. Repeated attack from terrorist group Houthis on these vessels have made import difficult. Many traders are now looking for alternative routes which are longer which means higher transportation cost. If import of crude oil vessels are impacted it will lead to supply shortage. This will in turn force the Oil Marketing Companies (OMCs) to raise mobility fuel prices. Eventually, petrol and diesel prices will rise and transportation cost inflation will balloon up.
2. Rise In Inflation In India
Plus, lot of commodities and raw materials used in manufacturing of many other products used in India are also imported on vessels through the Red Sea route. Surge in international petroleum prices will lead to higher import prices of such products because of costlier transportation expenses. This will lead to rise in prices of goods in India. The country’s domestic inflation was last reported at 3.8% in August 2024.
Also Read: Stock Market: Sensex, Nifty Continue To Bleed On Iran-Israel War Escalation Fears
