Global Markets Volatile Amid Rising Oil Prices and Geopolitical Tensions

Brent crude oil prices, which rose to a 45-month high of $119 a barrel last week, continued to dictate the course of our markets. Prices have been on the boil, rising 64% since the crisis in West Asia began. If oil prices remain elevated, they could dash hopes of rate cuts in the US or elsewhere in the world . The immediate future will also depend on whether crude retreats to the barracks or marches on to the beat of war drums. The Nifty fell 37 points, or 0.16%, for the week to close at 23,144. It was a volatile week that saw the Nifty rise 907 points from the low formed on Monday to the high formed on Wednesday, before surrendering all the gains and slipping to a weekly low of 22,930 on Thursday. It then recouped some of the lost ground to finally close the week with a loss of just 37 points. The intra-week low of 22,930 was a 49-week low and just 7 points above the support level of 22,923 that we had referred to last week. However, this level is unlikely to hold, as the SGX Nifty closed 291 points lower at 22,845 on Saturday, following a surge in crude oil prices and a fall in key US indices. We should, therefore, look at support levels beyond these numbers. To find the next support, we should refer to the adjoining weekly candlestick chart of the Nifty. The trendline numbered 88 is likely to act as a logical belay if the Nifty continues its southward journey. This trendline has been constructed by joining the lows of 21,281 and 21,743 registered on 7 June 2024 and 11 April 2025, respectively. It is an upward-sloping trendline, which means the support value will rise with each passing day. For this week, support is placed at 22,300 on this trendline. As the US spends millions of dollars to counter Iranian drones that cost only a fraction of that amount, it has realised that it cannot sustain a disproportionately expensive war for long. Although Iranian missiles have fallen short of Diego Garcia—a distance of 3,850 kilometres from Iranian shores—the development has stunned the West, as the newly demonstrated range is almost double the previously assumed 2,000-kilometre capability. The US has, therefore, threatened to bomb Iranian power plants if the Strait of Hormuz is not opened. The US appears to be blowing hot and cold. It has temporarily removed sanctions on Iranian oil cargoes currently at sea, a move that will allow allies in urgent need of supply to purchase them.