PSX tumbles as oil prices fuel rate hike fears

The Pakistan Stock Exchange remained under pressure on Friday as surging international oil prices and growing concerns over inflation weighed on investor sentiment.

The benchmark KSE-100 Index fell sharply during the session, touching an intraday low of 166,141.17 points. The level represented a decline of 2,723.87 points, or 1.61%, from the previous close of 168,865.04.

The index later recovered some of its losses but remained volatile. It reached an intraday high of 167,748.91 points, which was still 1,116.13 points below the previous session’s close.

Market participants are increasingly concerned that higher global energy prices could translate into another rise in domestic fuel costs. Such an increase could intensify inflationary pressures and influence the central bank’s monetary policy decisions.

Ismail Iqbal Securities CEO Ahfaz Mustafa said the stock market was facing pressure because of rising international oil prices amid the ongoing US-Iran conflict and their impact on domestic petroleum prices.

He said higher energy costs could push inflation upward, with investors beginning to factor in the possibility of an interest rate increase at the next monetary policy review.

Investment and economic analyst AAH Soomro also linked the weak market sentiment to concerns over the oil market and rising geopolitical tensions around the Red Sea.

According to Soomro, investors remain cautious amid fears that further escalation involving Saudi Arabia and the Houthis could create additional disruptions to regional trade and energy supplies.

Global oil prices continued their upward trajectory on Friday, with both major benchmarks on course to finish the week above $100 a barrel for the first time since mid-May.

Brent crude rose to around $109.97 per barrel, its highest level in four months, following a 6% jump in the previous session. The benchmark has gained nearly 13% over the week.

Concerns over energy supplies have intensified following developments in Yemen and the wider Gulf region. The Houthis’ reported seizure of the port of Mocha has raised concerns about the security of shipping routes through the Red Sea.

At the same time, disruptions around the Strait of Hormuz have continued as attacks involving tankers have increased in recent days.

Analysts say attacks on Saudi energy infrastructure represent a further escalation in regional tensions and could prolong disruptions to energy supplies and international shipping.

For Pakistan, sustained high oil prices could increase the cost of fuel imports, put additional pressure on domestic petroleum prices and complicate efforts to contain inflation.