The Pakistan Stock Exchange (PSX) closed sharply higher on Monday, propelled by a significant drop in global oil prices and renewed optimism over potential US-Iran negotiations, according to market analysts.
The benchmark KSE-100 Index settled at 178,200.02, registering a gain of 2,105.91 points, or 1.2%. During the trading session, index touched an intraday high of 178,985.94, up 2,891.83 points, or 1.64%, before retracing slightly.
Market Drivers: Geopolitics and Oil Prices
The positive momentum was largely attributed to US President Donald Trump’s decision to delay military action against Iran in favor of pursuing diplomatic negotiations. This shift in approach has fueled hopes for reduced regional tensions and subsequently pressured crude prices downward.
“Trump’s message on delaying the attacks, having Israel on board for the plan in exchange for a rapid deal, is driving hopes of peace and falling oil prices. The market is happy hear that and thus is positive,” said AAH Soomro, an independent investment and economic analyst.
Huzaifa Riaz, Director at Mayari Securities (Pvt) Limited, noted that the market opened on a positive note, supported by the decline in global oil prices amid easing geopolitical. He added that while geopolitics may drive broader market direction, the ongoing earnings season is expected to generate stock-specific activity where companies deliver surprises.
Oil Markets React to Diplomatic Overtures
Brent crude futures tumbled more than 4% to $83.88 per barrel after Trump announced that talks with Tehran would commence on Monday. The US president had earlier called off an imminent attack on Iran to pursue a deal aimed at reopening the Strait of Hormuz and resolving the impasse over Tehran’s nuclear program.
indicated on Sunday that the negotiations would address the Strait of Hormuz and ultimately the denuclearisation of Iran. This marked a significant reversal from his earlier threats to strike Iran “very hard,” including potential attacks on energy infrastructure.
Adding to the positive sentiment, Iran stated on Sunday that it was nearing an agreement with Oman regarding a new shipping route through the strategic Strait of Hormuz. The dispute over control of the waterway had been a key driver of the recent escalation in regional tensions.
OPEC+ Supply Increase Compounds Price Decline
The downward pressure on crude prices was further reinforced by an agreement among Saudi Arabia, Russia, and five other key OPEC+ members to boost production by 188,000 barrels per day starting in September.
The PSX had also closed higher on Friday, with the KSE-100 Index gaining 546.13 points, or 0.31%, prior to Monday’s robust rally.
