Closure would disrupt supply, driving crude oil prices higher. Rising oil prices may fuel inflationary pressures, impacting central bank policy paths, borrowing costs, and the global economy. However, hopes of Iran leaving the Strait of Hormuz open limited the escalation’s impact on global markets.
20% of the world’s oil supply passes through the Strait, of which 50% is destined for China, a key Iranian ally. Economists speculated that disrupting supply to China would not be in Iran’s best interest.
WTI Crude Oil prices climbed 2.01% to $75.035 in early trading on June 23.
Technical Setup: 23,000 Support in Focus as Geopolitical Risks Surge
On June 23, the Hang Seng Index traded below its June highs, hovering around the May-early June congestion zone. Significantly, the index remained above the 50-day Exponential Moving Average (EMA), signaling a bullish bias. Despite the morning losses, oil and FX market movements signaled a short conflict, cushioning the downside for global equity markets.
An Iran-Israel ceasefire could allow progress toward a US-Iran nuclear deal, potentially driving the index back to 24,000. A sustained move above 24,000 could bring the June 11 high of 24,439 into play. Conversely, the Hang Seng Index could slide toward 23,000 if Iran closes the Strait of Hormuz, potentially exposing 22,500.
