The Pakistan Stock Exchange kicked off the trading week with a sharp decline, as the benchmark KSE-100 index shed over 1,600 points during intraday trading on Monday, reflecting escalating geopolitical tensions in the Middle East that threaten global oil supplies. Main Developments The KSE-100 index fell by 2,215.27 points at 10:19am, reaching 180,026.5 points from Friday's close of 182,241.77 points. By around 1pm, the index had partially recovered, trading 1,654.19 points lower. Heavyweight stocks contributed most to the early decline, though individual losses remained modest, falling between 1 and 1.7 percent. The refinery sector bucked the trend, staying positive on expectations of an upcoming refinery policy that could enable upgrades and expansions. Read also: Why Tarbela-5's cofferdam collapse reveals deeper project flaws Background The selloff follows fresh military strikes between the United States and Iran in an escalating contest over control of the Strait of Hormuz. Oil prices surged more than four percent on Monday due to the renewed fighting, according to Mettis Global, a financial portal. Awais Ashraf, director of research at AKD Securities, told Dawn that the attacks had reduced traffic through the Strait of Hormuz to a five-week low and cast doubt on the future of the interim peace agreement signed last month. On Friday, value-hunting had briefly reversed a three-session losing streak, but growing geopolitical concerns in the Middle East and the risk of oil supply disruptions continued to weigh on investor sentiment. Why It Matters For Pakistan, a country heavily reliant on oil imports through the Strait of Hormuz, any sustained disruption could fuel inflationary pressure and strain the economy. The stock market's decline signals that investors are pricing in heightened uncertainty, with the refinery sector's optimism contingent on policy reforms that remain unannounced. What's Next Market participants will watch for further developments in US-Iran negotiations and any impact on oil supply routes. The anticipated refinery policy, if unveiled, could provide a counterweight to broader market weakness, but the immediate direction hinges on whether geopolitical tensions ease or escalate further.