Impact of Ebrahim Raisi's Death on Oil, Gold and Stocks

On Sunday, Iranian President Ebrahim Raisi, a potential successor to Ayatollah Ali Khamenei, died in a helicopter crash, impacting oil, gold, and global markets.

On Sunday, In a major setback for Iran, the country’s president Ebrahim Raisi who was seen as a potential successor to supreme leader Ayatollah Ali Khamenei met a helicopter crash, and on Monday he was declared dead.
The crash happened in the mountain terrain near the Azerbaijan border.

Following the death, it created a major impact on oil and gold prices, as well as on global markets.

Iran is OPEC’s Third-largest Oil producer

The country produces about 3 million barrels of oil per day or 3% of total world oil output. It has many countries depending on it for oil like as of 2024 China has developed it’s way as a biggest importer of Iranian oil. Apart from China, India, Japan, South Korea and Turkey are also dependent on Iran’s oil exports.

Iran’s Remarkable Gold Export

In 2022, Iran exported $18.1k in Gold, making it the 167th largest exporter of Gold in the world. The main importer of Iran’s Gold is Canada.

With Raisi’s sudden death, It has definitely plunged country’s oil and gold market into deep trough.

Impact of Raisi’s death on oil prices

Crude Oil price: After Raisi’s death, oil prices in early Asian trading on Monday rose sharply.

Brent gained 41 cents, or 0.5 per cent, to $84.39 a barrel by 0632 GMT, after rising to $84.43 earlier, its highest since May 10.

The uncertainty over who would be Raisi’s successor, or Iran’s new President, could lead to volatility in oil markets as investors will keep a close eye on the possible impact on the country’s oil production and exports.

Supply of Iranian crude: If there are any major disruptions to the production of crude oil by Iran, global oil supplies and prices are expected to take a hit, considering Iran is among the top oil producers in the world.

However, a report by the Economic Times quoted experts saying they believe that despite volatility, the oil market is expected to remain largely rangebound.

Impact of Raisi’s death 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 of Raisi’s death on stock market

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.

Impact of Raisi’s death on Israel

Tensions between Iran and Israel escalated in April after Tehran launched hundreds of drones and ballistic missiles at Tel Aviv in response to an airstrike on an Iranian Consulate in Syria.

Raisi’s death is likely to result in a phase of political instability in Iran as the country braces itself to pick a new leader.

The ET report quoted experts saying that Raisi’s death would force the administration to quickly find a new leader as Iran is engaged in a regional war and has been facing economic challenges.

It is also being said that the new president will come with his own economic policies which could possibly have implications for Iran’s relationships with other nations and its approach towards sanctions and economic reforms.