Sri Lanka stocks slid 1.89 percent following Iran’s announcement that its parliament had voted to close the Strait of Hormuz.
The All Share Price Index fell 322.55 points to close at 16,765; while the S&P SL20 dropped 2.02 percent, or 103.21 points, to 4,991, Economynext reports.
As tensions in the Middle East escalate, Sri Lanka remains susceptible to increased economic shocks as its dependence on imported energy, particularly crude oil, leads to greater uncertainty amongst investors. The Middle East is a primary supplier, providing half of Sri Lanka's oil needs.
Sri Lanka, which spent approximately $4.4 billion on fuel imports annually even before the current escalation, a 10% increase in global fuel prices could add an additional $404 million burden to its annual import bill. This would drain its already depleted foreign exchange reserves, which were recently reported to be overstated by the government.
