Indian markets staged a sharp recovery on Friday after US President Donald Trump said he had called off planned military strikes on Iran and claimed that a peace agreement could be reached as early as this weekend.
The announcement triggered a broad relief rally across global markets and pushed oil prices lower, easing concerns over a prolonged disruption to energy supplies.
Oil prices retreat
Brent crude fell more than 1.3% to around $89.17 a barrel during the session after touching a two-month low of $88.44. For the week, Brent was down 4.2%.
WTI crude dropped nearly 3% at the open and hit an intraday low of $85.13 before recovering to around $86.48.
The decline followed Trump’s statement that a comprehensive peace framework had been approved by Iranian leaders and a regional coalition comprising:
- Israel
- Saudi Arabia
- UAE
- Qatar
- Turkey
- Jordan
- Egypt
Trump said Vice President JD Vance could attend signing ceremonies in Europe over the weekend.
Tensions had pushed oil higher
Earlier in the week, Iran had closed the Strait of Hormuz, a route that handles roughly one-fifth of global oil and LNG supplies.
Iran had also attacked commercial vessels in the waterway, including the MT Jalveer, which had 20 Indian crew members on board.
Those developments had driven crude prices higher in recent weeks.
Iran disputes Trump’s claim
Iran, however, denied that any agreement had been finalised.
According to the country’s semi-official Fars News Agency and Foreign Ministry spokespersons, no agreement text had been approved. Iranian officials also accused the United States of introducing fresh demands.
The conflicting claims have left markets uncertain about the durability of the relief rally.
Supply normalisation may take time
Energy analysts have warned that even if an agreement is reached, restoring normal oil flows through the Strait of Hormuz could take months.
Several factors could delay a full recovery:
- Clearance of underwater mines.
- Repair of damaged drone and missile infrastructure.
- Restart of shut-in oil fields.
As a result, the recent drop in oil prices reflects easing geopolitical fears rather than an immediate improvement in physical supply.
Rupee strengthens
Lower crude prices provided relief for India, which imports more than 80% of its oil requirements.
The USD/INR pair fell to 95.30 in early trade. The rupee later strengthened further to 95.08, marking a gain of around 0.5%.
Reduced demand from importers for dollars also helped support the domestic currency.
Equity markets rebound
Indian benchmark indices opened sharply higher.
In early trade:
- Nifty 50 rose 1.20% to 23,439.
- BSE Sensex gained 1.33% to 74,811.99.
Lower energy prices are expected to benefit sectors sensitive to input costs and currency movements, including:
- Aviation.
- Paints.
- Tyres.
Relief follows weeks of pressure
Indian markets had been under pressure in recent weeks amid elevated oil prices and foreign fund outflows.
Higher crude prices had weighed on the rupee and raised concerns about inflation.
Friday’s rebound reflected improving sentiment, though the rally remains dependent on diplomatic developments that have yet to be confirmed by Iran.
TL;DR:
Indian markets rebounded after President Donald Trump said planned strikes on Iran had been cancelled and claimed a peace deal was close. Brent crude slipped below $89, the rupee strengthened to 95.08 and benchmark indices rallied, although Iran denied that any agreement had been finalised.
AI summary:
- Trump said planned US strikes on Iran had been cancelled.
- Brent crude touched a two-month low of $88.44 per barrel.
- The rupee strengthened to 95.08 against the dollar.
- Sensex and Nifty opened sharply higher.
- Iran denied that a peace agreement had been finalised.