Trump threatens to bomb Iran's oil infra; what does it mean for Indian stock market, oil, gold, silver rates?

US-Iran news: The United States on Friday destroyed military targets on Iran's main oil hub of Kharg Island, President Donald Trump announced, threatening to strike its oil infrastructure if Iran continues attacks that have halted most ship traffic in the Strait of ​Hormuz. According to Reuters, the island serves as the export terminal for 90% of Iran's oil shipments. The news agency further added that Iran exported between 1.1 million barrels per day and 1.5 million barrels per day from Kharg Island when the US-Iran war began.

According to experts, the market is expected to react on Monday if the tension in the Kharg island escalates and the US military targets the oil infrastructure of Iran in Kharg island. They said that any hit to Iranian oil infrastructure would mean a sharp upside in crude oil prices on Monday. This means pressure on the Indian Rupee and the equity market. However, they maintained that gold and silver prices may remain flat or even rise, as demand for the metals has dipped amid weaker demand in the UAE.

Impact on crude oil prices

Decoding the impact of Trump's threat to Iran on Kharg Island oil infrastructure, Anuj Gupta, a SEBI-registered market expert, said, "The US President Donald Trump's threat to bomb Kharg Island has escalated the US-Iran war tension. As Iran supplied around 90% of its oil from the Kharg Island, which accounted for nearly 2% of global oil supply. So, it would have a direct impact on the crude oil prices when the market reopens after the weekend holidays. We can expect the Brent Crude oil to sustain above $100 per barrel and try to come close to its existing hurdle placed at $120 per barrel."

The SEBI-registered expert said that the US-Iran war has overstretched, entering its third week today. If there is no signs of de-escalation in the US-Iran war, then in that case Brent Crude Oil may break above its current resistance and touch $150 per barrel in the near term.

Impact on the Indian stock market

Expecting a gap-down opening on Monday, Avinash Gorakshkar, a SEBI-registered fundamental equity analyst, said, “Rising crude oil prices mean pressure on the Indian Rupee as India meets 85% of its oil demand through imports. So, soaring crude oil prices mean a higher outflow of the US Dollar and a rise in inflation. So, the market would try to offset the negative impact of the soaring crude oil prices in advance when the market resumes trade activity on Monday.”

Speaking on the outlook of the Nifty 50 index in the wake of the US-Iran war, Mehul Kothari, Deputy Vice President — Technical Research at Anand Rathi, said, "The Nifty 50 index has now retraced nearly 61.8% of the entire rally from the low of 21,743 to the recent high of 26,373, bringing it close to an important technical support area. A decisive move below 22,900 could open the doors for the 22,800 – 21,800 zone, which may remain volatile and confusing for traders due to the absence of strong intermediate supports."

Unveiling the intraday trading strategy amid the escalation in the US-Iran war, Mehul Kothari of Anand Rathi said that, given heightened global uncertainty and geopolitical developments, traders should avoid aggressive new positions and focus more on risk management and hedging existing exposure.

Impact on gold, silver rates

On how the escalation in the US-Iran war would impact gold and silver rates, Anuj Gupta said, "Gold and silver prices are expected to remain sideways to positive. Normally, during war, gold and silver prices escalate, but during the US-Iran war, both precious metals have remained non-participants. The major reasons behind this are escalating crude oil prices, a strong US Dollar, and rising US Treasury yields. These three have capped the rally in the precious metals."

However, Anuj Gupta maintained that crashing demand in the UAE is also a major factor behind the sideways movement in gold and silver rates. He said that around 20% of global gold and silver consumption is in the UAE. But due to the US-Iran war, precious metals are trading at a whopping premium in the UAE, which has damaged safe-haven demand for gold and silver.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.