Indian shares poised to fall as Mideast tensions push crude to $108

On Friday morning, Indian stock traders were bracing for steep losses before the opening bell. Brent crude had climbed to $108 a barrel overnight—a jump driven by widening conflict in the Middle East and the threat it posed to global shipping lanes. The surge in oil prices hit India with particular force, since the country depends on imports for most of its energy and has little cushion when crude costs spike.

The immediate trigger was military action in Yemen. Houthi forces, aligned with Iran, seized the port city of Mocha on Thursday and pushed south along the Red Sea coast, taking control of strategic islands, according to military sources. This mattered because the Red Sea is one of the world's most critical shipping routes. At the same time, traffic through the Strait of Hormuz—the narrow passage between Iran and Oman that carries roughly a third of global seaborne oil—remained severely restricted due to intensifying tanker attacks. Together, these disruptions meant that oil moving from the Middle East to markets worldwide faced real obstacles, and traders responded by bidding prices higher.

The timing was awkward for India's financial markets. A major IPO season was already underway, with large share offerings from the National Stock Exchange of India and potentially from Jio Platforms, the company backed by billionaire Mukesh Ambani. Heavy selling pressure from rising oil prices would make it harder for these offerings to succeed and would dampen appetite for equities more broadly.

India's vulnerability to oil shocks is structural. The country imports the vast majority of its crude, so when global prices rise, the impact flows directly into the nation's import bill, inflation rates, and corporate profit margins. Ponmudi R, chief executive of the stock broker Enrich Money, captured the concern plainly: higher crude prices would deepen worries about India's import costs, push inflation higher, and squeeze the earnings of companies across the economy, all of which would keep investors cautious about taking on risk.

Foreign investors were already voting with their feet. On Thursday alone, they had net sold Indian shares worth 4.38 billion rupees, or roughly $45.89 million. More telling was the broader September picture: foreign money had flowed out of Indian equities to the tune of $1.36 billion so far in the month. That outflow reflected a global shift in sentiment—when geopolitical tensions rise and oil prices spike, money tends to leave emerging markets and seek safer ground.

The question hanging over Indian markets was whether crude would stabilize or climb further. President Trump had suggested he expected the Iran conflict to wind down after the U.S. midterm elections, but that was a forecast, not a guarantee. Until the Red Sea remained open and tanker attacks subsided, oil would likely stay elevated, and Indian investors would remain on edge.