Tehran: Former Iranian President Ebrahim Raisi, a hardline ally of the Islamic cleric establishment and tipped to become the next Supreme Leader of the country, tragically died in a helicopter crash at 63, sending shockwaves across the Middle East and the world. Raisi’s death, along with the foreign minister and other officials, comes as Iran faces domestic dissent and the world.
Raisi’s untimely death has prompted speculation over its potential ramifications on regional stability, global markets and the oil industry. Iran is a major producer of oil and any conflict involving Iran is likely to raise the prices and threaten to destabilise the entire Middle East region. The death of the late president is concerning financial markets, and commodities in particular, because of Iran’s position in the global economy which has been further destabilised through its April 13 drone attack on Israel last month, as per Euronews.
In general, wars lead to geopolitical uncertainties that put a burden on global economies and fears of supply disruptions lead to sharp upticks in oil prices. For example, the Russia-Ukraine war had a profound impact on the global economy as crude oil prices touched over $133 per barrel, the highest spike since 2008. The outbreak of the Israel-Hamas war on October 7 last year also led to a sharp rise in oil prices.
How did Raisi’s death impact oil prices?
After Raisi’s death was confirmed, international crude oil prices rose sharply amid political uncertainty in oil-producing countries. As per reports, Brent crude oil prices gained 41 cents (0.5 per cent) to $84.39 per barrel by 6:30 am GMT (12:02 pm IST). US West Texas Intermediate (WTI) crude for June soared by 23 cents to $80.29 per barrel. These prices were also affected after Saudi Arabian Crown Prince Mohammed bin Salman postponed his visit to Japan scheduled to begin on Monday due to King Salman’s health issue.
However, Raisi’s death was unlikely to significantly impact oil market prices as Supreme Leader Ayatollah Ali Khamenei holds the ultimate say on all state matters. Consequently, oil prices fell in early Asia trade on Tuesday, with investors anticipating lingering US inflation and higher interest rates to depress consumer and industrial demand.
“The death of the Iranian President and the Saudi king’s health issue don’t seem to be affecting the market much, as it is unclear whether they will have an immediate impact on energy policy,” Fujitomi’s Tazawa said. Investors are focusing on supply from the Organization of the Petroleum Exporting Countries and its affiliates, together known as OPEC+.
Gold prices
Meanwhile, the news of Raisi’s death caused gold prices to reach a record high on Tuesday, along with factors of US rate cut expectations, China;s stimulus measures and more. Spot gold rose 0.9 per cent to $2,435.96 per ounce as of 2:26 pm ET (1826 GMT) after hitting a record high of $2,449.89 earlier in the session. US gold futures settled 0.9 per cent higher to $2,438.50.
Meanwhile, spot silver rose 2.2 per cent to $32.17 after hitting an over 11-year high. Additionally, Platinum dipped 2.5 per cent to $1,053.43 after hitting its highest since May 2023, while Palladium rose 2 per cent to $1,028.66.
Stock markets
Most stock markets in the Gulf slipped on Monday amid political uncertainty in the region. Saudi Arabia’s benchmark stock index (.TASI) dropped 0.6 per cent with most of its constituents posting losses, led by IT, real estate and finance stocks. Saudi National Bank, the kingdom’s largest lender, slipped 2 per cent and Saudi Basic Industries (2010.SE), one of the world’s biggest petrochemical companies, declined 2.3 per cent.
The Qatari benchmark index (.QSI) eased 0.3%, pressured by a 1.2% drop in Qatar National Bank, the region’s largest lender and a 0.5% loss in Industries Qatar (IQCD.QA). However, world stocks advanced as the Dow Jones Industrial Average closing above 40,000 for the first time.
Interim set-up in Iran
First Minister Mohammad Mokhbar has replaced Raisi as Iran’s first acting President. According to the Iranian constitution, a person who holds the post of vice president can hold the position of President until the next elections. As interim president, Mokhber is part of a three-person council, along with the speaker of parliament and the head of the judiciary, that will organise a new presidential election within 50 days of the president’s death.
Iran’s cabinet appointed Ali Bagheri as acting Foreign Minister. Iranian Supreme Leader Ayatollah Ali Khamenei, whose authority extends to crucial matters like foreign policy and Iran’s nuclear program, had moved swiftly to reassure the nation, emphasising that despite the loss, state affairs would continue uninterrupted.
(with inputs from agencies)
ALSO READ | How Ebrahim Raisi’s helicopter crash could reverberate across Middle East I EXPLAINED