PSX declines by 13,000 points due to Middle East tensions and fears regarding the policy rate.

The Pakistan Stock Exchange (PSX) persisted in its decline on Monday, with the KSE-100 index plummeting almost 13,000 points at the commencement of the new trading week, as investors withdrew capital due to heightened tensions in the Middle East and concerns regarding a potential rise in the policy rate.

The benchmark index declined significantly by 13,109.39 points, settling at 144,386.71 points, which represents a decrease of 8.32 percent from the prior close of 157,496 points.

Trading operations at the stock market was previously interrupted following a drop exceeding 10,000 points.

Conversely, oil prices escalated over 20% on Monday, reaching its apex since July 2022, as the escalating U.S.-Israeli conflict with Iran prompted many significant Middle Eastern oil producers to reduce supplies, along with concerns regarding sustained disruptions to shipping via the Strait of Hormuz chokepoint.

Iraq and Kuwait have initiated reductions in oil production, complementing prior decreases in liquefied natural gas from Qatar, due to the conflict obstructing imports from the Middle East.
Analysts anticipate that the United Arab Emirates and Saudi Arabia will soon need to reduce production as their oil storage capacity is depleted.

The battle may result in consumers and businesses globally enduring prolonged periods of inflated fuel costs, even if the recently commenced hostilities conclude swiftly, due to suppliers contending with impaired infrastructure, disrupted logistics, and heightened shipping risks.

Brent crude futures increased by $18.35, or 19.8%, reaching $111.04 a barrel, and were up $15.24, or 16.4%, at $107.93 as of 0014 GMT on Monday.

U.S. West Texas Intermediate (WTI) crude futures increased by $16.50, or 18.2%, reaching $107.40 per barrel, after earlier jumping by $20.34, or 22.4%, to $111.24 during the session.

Brent increased by 27% and WTI ascended by 35.6% last week, prior to the most recent surges.