As crude prices rise due to the Israel-Iran confrontation, the stock market drops more than 1%; increased volatility is reflected in the Nifty, Sensex, and India VIX.
The price of crude oil, a vital commodity for many businesses, skyrocketed on Monday as the Israeli-Iranian dispute escalated into a full-fledged war in West Asia, causing the Indian stock market to open much lower. There were losses in other important Asian markets as well.
At roughly 10:20 AM, the benchmark Nifty 50 index of the National Stock Exchange (NSE) is trading 296 points, or 1.2%, lower at 24,970.15 points after opening the day more than 2% lower. Additionally, the 30-stock Sensex index of the BSE is down 1.2%. The Nifty Oil & Gas index (down 1.5%) is the most negatively impacted of the NSE’s sectoral indices.
An increase in volatility
The market volatility indicator, the India VIX, rose about 7% to 16, the highest level since June 2025. After being burdened by several conflicts and trade-related issues over the past year or two, it shows market hesitancy as another geopolitical conflict emerges.
The most recent worries follow the airstrikes that killed Iran’s Supreme Leader, Ayatollah Ali Khamenei, by Israel and its ally, the United States. Due to the extensive scope of the fight and the resulting collateral damage, Iran retaliated by attacking Israel and American bases in a number of Middle Eastern countries. As a result, Dubai’s airport, which was the busiest in the world, was forced to close indefinitely. Tensions increased when proxies like Hezbollah, which is located in Lebanon, stepped in.
Concerns were heightened as Iran strengthened its control over the Strait of Hormuz, a vital waterway for global trade. The majority of vessels have ceased exports in the river, including those transporting liquefied natural gas and crude oil. With 20% of the world’s oil shipments passing through the crucial waterway, this caused crude oil prices to soar 10% on Sunday and above $73 per barrel, the highest levels since July 2025. If the conflict lasts longer, many analysts predict that crude oil prices would rise above $100 per barrel.
Impact in the short term
Crude is India’s largest import and one of the most crucial inputs for industry. On an annualized basis, the oil import bill is predicted to rise by up to $2 billion for every $1 increase in oil prices.
Given that 55% of India’s crude oil supplies and 17% of its exports come from the Middle East, Jefferies anticipates that the conflict will have a short-term effect on the Indian market. But according to BofA, India now has a three-week supply of crude oil, which serves as a cushion for the time being.
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