PSX Drops 1,693 Points as Iran-US Tensions and Oil Prices Rattle Investors
KARACHI, PAKISTAN — WEB DESK: The Pakistan Stock Exchange (PSX) came under heavy selling pressure as rising international oil prices and escalating tensions around the Strait of Hormuz rattled investors, sending the benchmark KSE-100 index down nearly 1%.
The index closed Monday at 173,636.08 points, losing 1,692.74 points, or 0.97%, from Friday’s close of 175,328.82.
The market briefly climbed to an intraday high of 175,353.67 before selling accelerated and dragged the benchmark as low as 173,603.75.
The decline pushed the KSE-100 below the psychologically important 174,000-point level.
Rising Oil Prices Hit Investor Confidence
The biggest external pressure came from renewed tensions between the United States and Iran and the resulting rise in global crude prices.
Tit-for-tat strikes involving vessels near the Strait of Hormuz heightened fears that Middle Eastern oil supplies could remain disrupted for longer than previously expected. Iran’s plans for a restricted Gulf maritime zone and a new shipping corridor have added to uncertainty surrounding the crucial energy route.
Global markets have also been under pressure from the oil rally. Brent crude traded around $97 per barrel as investors assessed the risk of further escalation, increasing concerns about inflation and tighter monetary policy internationally.
For Pakistan, sustained high crude prices are particularly important because of the country’s dependence on imported energy.
Higher petroleum costs can increase the import bill, pressure the current account and contribute to domestic inflation, making international oil movements an important driver of sentiment at the PSX.
Banks, Oil, Cement and Refineries Face Selling
Selling was broad-based across several heavyweight sectors.
Commercial banks, oil and gas companies, cement producers, oil marketing companies, automobile assemblers and refineries were among the sectors facing pressure.
Arif Habib Limited said only 12 KSE-100 constituents advanced while 87 declined, reflecting the strength of the risk-off sentiment.
Among the largest drags on the benchmark were United Bank Limited (UBL), Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL). UBL declined 2.69%, OGDC 2.48% and PPL 1.78%, according to the market report.
Pakistan Services, Askari Bank and Adamjee Insurance were among the stocks providing some support to the index.
Refinery Stocks Face Additional Pressure
Domestic policy developments also weighed on refinery shares.
Market participants reacted to reports that the federal government could impose financial penalties on oil refineries that fail to execute Upgradation Agreements with the Petroleum Division by October 1, 2026.
That added a sector-specific concern to an already difficult session driven by geopolitical and macroeconomic uncertainty.
KTrade Securities said selling was visible across banks, oil and gas, cement, fertiliser and refinery stocks, describing the session as one characterised by widespread profit-taking and risk aversion.
Trading Volume Falls to 679 Million Shares
Investor participation also weakened.
Overall trading volume declined to 679.2 million shares, compared with 874.3 million shares on Friday, while the value of shares traded stood at approximately Rs23.7 billion.
A total of 495 companies traded in the ready market.
Of those, 154 stocks advanced, 311 declined and 30 remained unchanged.
Cnergyico PK topped the volume chart with 82.5 million shares, falling Rs0.90 to close at Rs13.02. Foreign investors were net sellers of shares worth around Rs122.5 million, according to National Clearing Company data cited by the Tribune.
KSE-100 Moves Toward July Low
Arif Habib Limited said the index’s fall below 175,000 leaves the market moving towards its July low near 170,000, which it identified as a near-term technical target.
The outlook remains heavily dependent on geopolitical headlines and international crude prices.
KTrade warned that investor sentiment was likely to remain cautious, noting that moderation in crude prices could provide relief while further escalation could maintain pressure on Pakistani equities.
Why Oil Prices Matter for PSX
The relationship between crude prices and Pakistani equities extends beyond listed oil companies.
Pakistan is a major energy importer, meaning a prolonged rise in global crude prices can affect the economy through several channels:
- A higher petroleum import bill
- Increased pressure on foreign-exchange requirements
- Greater inflation risks
- Potential pressure on fuel and transportation costs
- Increased uncertainty around the current account and macroeconomic stability
Topline Securities said precisely these concerns — inflation, the external account and broader macroeconomic stability — were behind investors’ cautious approach.
Global markets are facing similar pressure. Rising Middle East tensions and crude prices have weighed on equities across several regions as investors assess the inflationary implications of prolonged energy disruptions.
PSX Remains Vulnerable to Geopolitical Headlines
The latest decline follows a volatile period for Pakistani equities.
On September 2, the KSE-100 had already dropped around 1,690 points amid renewed fighting around the Strait of Hormuz and rising crude prices.
This indicates that international geopolitical developments have become an increasingly important short-term driver of PSX sentiment.
For investors, the next direction will likely depend on whether Iran-US tensions de-escalate, oil prices retreat and shipping conditions around the Strait of Hormuz stabilise.
Until then, analysts expect volatility to remain elevated and trading to stay highly sensitive to geopolitical headlines.
