Oil Prices Plummet Amid US-Iran Ceasefire

Crude oil prices dropped significantly, hitting their lower limits in futures trading. The decline follows a US-Iran ceasefire announcement, which is expected to restore oil supply through the Strait of Hormuz. This de-escalation unwound geopolitical risk premiums, calming fears of supply disruptions.

In a significant downturn, crude oil prices plummeted by 6% on Wednesday, hitting their lower circuit levels during futures trading. This steep decline followed the announcement of a two-week ceasefire between the US and Iran, which led to weakened global benchmarks.

On the Multi Commodity Exchange, crude oil futures for April saw a significant slump of Rs 640, or 6%, to end at Rs 10,029 per barrel. Similarly, the May contract fell by Rs 565, closing at Rs 8,860 per barrel, marking its lower circuit limit amid aggressive selling as apprehensions of supply disruptions eased.

Globally, oil prices fell sharply post the ceasefire announcement expected to restore supply flows through the crucial Strait of Hormuz. Consequently, West Texas Intermediate crude futures for May fell by 15.15% to USD 95.84 per barrel, while Brent oil for June declined by 13.29% to USD 94.75 per barrel. This unwinding of geopolitical risk premiums was largely attributed to the reduced tensions in West Asia after the agreement, allowing oil markets to stabilize.

(With inputs from agencies.)