On a Thursday morning in March, the quiet arithmetic of global commerce was once again interrupted by the sound of war at sea. Reports that explosive-laden boats had struck tankers near the Strait of Hormuz and Iraqi waters sent crude prices climbing sharply, a reminder that the world's energy lifelines remain exposed to the wider conflict surrounding Iran. Markets from Mumbai to New York were left to weigh a familiar human dilemma: how much of today's shock will harden into tomorrow's rising prices, and how long can economies absorb it before central banks are forced to abandon hopes of easin
Indian Shares Set to Open Lower as Iran Ship Attacks Send Oil Soaring
On a Thursday morning in March, the quiet arithmetic of global commerce was once again interrupted by the sound of war at sea. Reports that explosive-laden boats had struck tankers near the Strait of Hormuz and Iraqi waters sent crude prices climbing sharply, a reminder that the world's energy lifelines remain exposed to the wider conflict surrounding Iran. Markets from Mumbai to New York were left to weigh a familiar human dilemma: how much of today's shock will harden into tomorrow's rising prices, and how long can economies absorb it before central banks are forced to abandon hopes of easing.
Indian shares were poised to open lower on Thursday, March 12, extending the previous session's losses, after oil prices surged on reports of fresh attacks on ships near the Strait of Hormuz and in Iraqi waters. Iraqi security officials blamed Iran for boats loaded with explosives that struck two fuel-oil tankers, and said Iraq's oil ports had stopped operating altogether. The attacks add to wider supply disruptions linked to the U.S.-Israeli war on Iran.
Brent crude rose about 7% to $98.50 a barrel, and West Texas Intermediate climbed to $93.43. The rally came despite a historic response: the International Energy Agency planned to release 400 million barrels from its reserves, its largest intervention ever, with the United States pledging 172 million barrels beginning next week. Traders were not reassured.
For India and other importers, the concern runs through inflation. Costlier oil lifts consumer prices, which makes central banks less likely to cut interest rates. Foreign investors sold shares worth roughly 59.65 billion rupees on Wednesday, and domestic buyers could not fully offset the exodus. Asian markets followed the overnight declines in the U.S. and Europe. What comes next depends on whether the disruption to shipping and Iraqi exports endures.
Indian shares were set to open lower on Thursday, March 12, adding to the previous session's losses, after oil prices surged on reports of new attacks on ships in the Strait of Hormuz and in Iraqi waters.
The jump in crude came after Iraqi security officials said boats loaded with explosives, which they attributed to Iran, had struck two fuel-oil tankers. The officials added that Iraq's oil ports had completely stopped operations. Oil rose by as much as 8.2% on the reports. The attacks come amid wider supply disruptions tied to the U.S.-Israeli war on Iran.
By 0200 GMT, Brent futures were up $6.50, or about 7%, at $98.50 a barrel. U.S. West Texas Intermediate crude had gained $6.10, or 7.1%, to $93.43.
The rally came despite an unusually large effort to cool the market. The International Energy Agency has planned to release 400 million barrels from its reserves, the largest such move in its history. The United States has pledged to contribute 172 million barrels of that total, beginning next week. Neither step was enough to settle traders.
The concern for India, and for other markets, runs through inflation. Higher oil prices feed into consumer prices, and that in turn tempers expectations that central banks will cut interest rates. Investors are weighing how much the Middle East conflict will affect inflation, and whether pressure on global oil supplies will be sustained.
The weakness was regional. Asian shares fell, following an overnight decline in U.S. and European markets.
In India, the selling on Wednesday was led by foreign money. According to provisional data from the National Stock Exchange, foreign institutional investors sold shares worth 59.65 billion rupees, about $646.7 million. Domestic investors absorbed part of that, buying 46.14 billion rupees' worth, which left a net outflow. The conversion used was 92.2390 rupees to the dollar.
What to watch now is whether the disruptions to shipping and Iraqi export operations persist, since that will shape the path of oil, inflation and rate-cut expectations.
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