Impact of Iranian President Raisi's death on oil, gold and stock market

Oil prices shot up following the news of Raisi's helicopter crash in Asian Markets; OPEC and its allies are expected to meet on June 1

The sudden death of Iranian President Ebrahim Raisi in a helicopter crash has taken everyone by surprise. It comes at a time the Iran is involved in a proxy war with its old rival Israel.

Impact on oil prices

The death of the Iranian president is likely to cause volatility in oil markets as investors gauge the potential impact on the country's oil production and exports. In early Asian trading on Monday, oil prices increased following the news of Raisi’s death.

Any interruptions to Iran’s oil production could affect global oil supplies and prices, given Iran's role as a major oil producer. Despite this, experts suggest that the oil market may remain relatively stable due to existing supply capacities.

 

The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) are scheduled to meet on 1 June.

Impact on gold

Geopolitical uncertainty typically drives investors towards safe-haven assets like gold, pushing prices higher.

Following Raisi’s death, gold prices surged to new record highs, with bullion increasing by as much as 1.1 per cent to reach $2,440.59 an ounce.

This rise is also attributed to optimism that the US Federal Reserve will implement two interest rate cuts this year, following lower-than-expected inflation figures last week, according to a report by The Telegraph, UK.

Impact on stock markets

The news of Raisi's death could also affect stock markets as investors react to potential shifts in regional stability and economic policies. However, market reactions may be tempered by the substantial spare capacity that OPEC maintains, which can cushion against immediate disruptions.

The incident occurred shortly after India signed a pivotal agreement with Iran to operate the Chabahar port, a strategic initiative aimed at boosting trade with Central Asia.

The recent agreement has faced criticism from the US, with State Department spokesperson Vedant Patel warning of potential sanctions for those engaging in business with Iran. Nonetheless, India's External Affairs Minister S Jaishankar highlighted the port's regional benefits and advocated for a broader perspective, noting previous US recognition of Chabahar's strategic importance.

Interim leadership in Iran

Following the helicopter crash, Iran has appointed Mohammad Mokhber, 68, as interim president. Mokhber, who previously served as Iran's first vice president, now heads a three-person council responsible for organising a new presidential election within 50 days.

(With inputs from agencies)