Iran is set to open the Strait of Hormuz in 7 days, this will affect everything from the stock market to gold and silver.

Iran has recently said it is ready to reopen the Strait of Hormuz if the US reduces its military pressure and lifts the blockade on Iranian ports. News agency Reuters quoted a senior Iranian official as saying the Islamic Republic could reopen the vital sea route within seven days if Washington eases its military pressure and lifts the blockade on Iranian ports.

Following this report, crude oil prices fell significantly; Brent crude has fallen below $100 per barrel. A Reuters report found that Tehran is ready to open the Strait of Hormuz if the US reduces its military pressure. The report also said that Tehran’s proposal was sent to the United States by mediators on September 16. An Iranian official told Reuters that an end to the US-Iran standoff could be negotiated by mediators in New York.

On Sunday, Iran threatened a strong response to any military attack. The threat came as Iran’s military central command said it had learned that the US was preparing to resume military operations with the help of regional countries. If Iran reopens Strait of Hormuz, how will it affect Indian stock market and gold-silver prices, let’s try to understand it in detail…

What effect could it have on the stock market?

The Strait of Hormuz is an important seaway through which a large portion of the world’s energy supply passes. About 20 million barrels of oil – about a fifth of world consumption – and about a fifth of the world’s LNG trade pass through the narrow strait connecting the oil-rich Persian Gulf to the Indian Ocean.

The reopening of this vital sea route could bring down oil prices significantly, providing a major macro-economic relief to India, the world’s third-largest importer of crude oil. Experts believe that a major drop in crude oil prices could change the trend of the Indian stock market, which has been moving in a range in recent times.

VK Vijayakumar, chief investment strategist at Geojit Investments, said that Iran’s opening of the Strait of Hormuz would benefit the domestic market. Major indices may show good gains and come out of their consolidation phase.

Ajit Mishra, SVP of Research at Religare Broking shares a similar view. Mishra said that if the Strait of Hormuz opens, the domestic market can see good growth. Iran itself has proposed opening it, if the US eases its pressure. A positive development in this direction could help the market come out of consolidation.

On the other hand, Mishra also said that for sustained growth, oil prices will have to fall below $90 per barrel and remain low. Nifty has been declining for the last two years. The index has fallen nearly 11 percent so far this year.

Impact on gold prices

Reopening the Strait of Hormuz would lower oil prices, reducing inflationary fears and reducing the likelihood of monetary policy tightening by the US Federal Reserve and other major central banks around the world. This would be a good thing for gold prices.

SEBI-registered research analyst Anuj Gupta said that a fall in oil prices will remove the fear of interest rate hike, which could lead to a rise in gold prices. Gold prices on MCX could go up to 1,53,000-1,54,000 per 10 grams.

In order to retain the profit it has to pay Rs. Above 1,54,000 will have to be closed. Trivedi said that due to these geopolitical reasons, gold prices are likely to fluctuate. Gold price Rs. 1,51,000 to Rs. 1,54,500 can be in the range.

Crude oil 10 to 11 percent cheaper

If we talk about the prices of crude oil, after September 15, prices have decreased by 10 to 11 percent in the international market. If we talk about Brent crude first, on September 15, its price fell to 108.75 dollars per barrel. Which has now come down to $98.27 per barrel. It means that during this period the price of Brent crude has decreased by about 10 percent.

On the other hand, American crude prices have seen a decline more than Brent. If we look at the data, the price of American crude oil was 100.75 dollars per barrel on September 15, now it has decreased to 89.48 dollars. This means that US oil prices have fallen by more than 11 percent since then.