Global crude oil prices tumbled close to 5 per cent on Tuesday, falling back to levels seen before the Iran-Israel conflict, after news of a tentative ceasefire between the two nations eased fears of a broader supply disruption.
As of Tuesday mid-morning US time (around 7:30 PM IST), Brent crude, the global benchmark, was trading 4.4 per cent lower at $68.24 per barrel, while West Texas Intermediate (WTI) dropped 4.7 per cent to $65.41 per barrel. The sharp decline reversed most of the gains made during the recent geopolitical flare-up.
The market response followed US President Donald Trump’s announcement of a fragile ceasefire on Monday night (Tuesday morning IST), although Israel later accused Iran of breaching terms, which Tehran denied.
The near 5 per cent drop is being interpreted as investor relief that oil supply routes, particularly through the Strait of Hormuz, may remain unaffected for now. The strait handles nearly 25 per cent of the world’s oil shipments, and earlier, Goldman Sachs had warned that prices could exceed $100 per barrel in the event of a prolonged disruption.
India imports over 85 per cent of its oil, a sustained decline in crude prices could help bring down fuel costs and support macroeconomic stability.
Equity markets rallied globally. In the US, the Dow Jones rose over 300 points, while the S&P 500 and Nasdaq gained 0.7 per cent and 1 per cent, respectively. In Asia, Hong Kong’s Hang Seng rose 2 per cent, and Shanghai Composite gained 1.2 per cent. Europe’s STOXX 600 was trading 1.2 per cent higher as of mid-morning ET.
Crude prices had surged after Israel’s June 13 strike on Iranian nuclear sites. Prices touched five-month highs last week before slipping sharply on Monday following Iran’s limited missile response targeting US bases in Qatar.
