Crude oil prices slide over 5%; Indian markets poised for strong opening as U.S.-Iran peace deal eases supply concerns

Global crude oil prices plunged more than 5% in early trade on Monday after the United States and Iran reached a landmark agreement to end hostilities in the Middle East, easing fears of disruptions to energy supplies passing through the strategically vital Strait of Hormuz.

The sharp decline in oil prices triggered a wave of optimism across financial markets, with investors betting that easing geopolitical tensions would restore stability to global energy flows and improve the outlook for major oil-importing nations such as India.

In early Asian trade, West Texas Intermediate (WTI) crude dropped 5.18% to $80.48 per barrel, while Brent crude futures fell 4.36% to $83.52 per barrel. The selloff came after reports indicated that Washington and Tehran had agreed to an immediate cessation of military operations, raising hopes that the months-long conflict in the region could finally be coming to an end.

Trump announces Iran peace deal

U.S. President Donald Trump announced the development on social media, stating that an agreement with Iran had been finalised. He also signalled the reopening of the Strait of Hormuz and the removal of naval restrictions that had raised concerns over global oil shipments in recent months. Iranian officials later confirmed that the conflict had formally ended, further boosting market confidence.

The Strait of Hormuz handles a significant portion of the world's crude oil exports, and any threat to shipping activity in the region typically results in sharp spikes in energy prices. With fears of supply disruptions now easing, traders rushed to unwind risk premiums that had been built into crude prices over recent weeks.

According to Ponmudi R, CEO of Enrich Money, the decline in crude prices strengthens India's macroeconomic outlook and could have a favourable impact on several sectors. Industries that are heavily dependent on fuel and petroleum derivatives, including aviation, oil marketing companies, paints, chemicals and consumer-focussed businesses, are expected to benefit from lower input costs.

Sensex, Nifty seen opening higher

The fall in oil prices is particularly positive for India, which imports more than 80% of its crude oil requirements. Lower energy costs could help reduce the country's import bill, improve its current account position, and ease inflationary pressures.

The U.S.-Iran peace deal is also likely to support domestic equities. Tracking firm cues from the Asian markets, the GIFT Nifty was trading 386 points, or 1.61%, higher at 24,014, indicating a strong gap-up opening for Indian benchmark indices, Sensex and Nifty.

Meanwhile, Asian peers reflected the improving risk appetite among investors. Japan's Nikkei surged more than 5%, while South Korea's Kospi climbed over 5%. Taiwan's benchmark index gained 2.5%, while Singapore, China and Indonesia also traded firmly in positive territory.

Market analysts believe the reduction in geopolitical uncertainty could trigger a broad-based relief rally across global equities, particularly in emerging markets that were vulnerable to rising oil prices.

Ponmudi R noted that sentiment has turned decisively positive following the reported US-Iran agreement and the sharp correction in crude prices. The development has significantly reduced concerns surrounding energy supply disruptions and created a more supportive backdrop for risk assets.

However, investors are likely to remain watchful of further developments, including the formal implementation of the agreement and the full reopening of shipping routes through the Strait of Hormuz. Any delay or setback in the peace process could revive volatility in commodity and financial markets, he said.

Among individual stocks, Dr. Reddy's Laboratories, Vedanta, Adani Green Energy, Krishna Institute of Medical Sciences (KIMS), JSW Energy and Nestlé India are expected to remain in focus amid company-specific developments and corporate announcements.

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