Crude conundrum: Oil prices fall despite Iran mocking Trump’s end-of-war soon claims
Virendra Pandit
New Delhi: Despite the West Asian crisis escalating due to the ongoing Iran war, crude oil prices slumped over 8 percent on Tuesday to USD 87.81 (Rs. 8,069) per barrel in futures trade following comments from US President Donald Trump that the conflict may be nearing its end, easing fears of prolonged supply disruptions, at least for now.
Ending its three-day rally, crude oil for March delivery depreciated by Rs. 719, or 8.18 percent, to Rs. 8,069 per barrel on the Multi Commodity Exchange (MCX), the media reported.
Similarly, the April contract on the MCX slumped by Rs. 531, or 6.21 percent, to Rs. 8,017 per barrel in 6,359 lots.
The fall came after crude oil prices witnessed extreme volatility. On Monday, the March contract had surged more than 26 percent to hit a record high of Rs. 10,549 per barrel.
However, prices later pared gains sharply and closed nearly 17 percent lower at Rs. 8,788 per barrel, down by Rs.1,761 from the peak level.
Experts said the oil prices plummeted as ‘easing’ geopolitical tensions reduced the risk premium that had pushed the energy rates sharply higher in the previous session.
Globally, West Texas Intermediate (WTI) crude oil for April delivery fell USD 6.65, or 7.02 percent, to USD 88.12 per barrel, while Brent Crude for May contract was trading 6.1 per cent lower at USD 92.92 per barrel in New York.
WTI crude futures fell below USD 90 per barrel after surging to nearly USD 120 in the previous session, as the US President signalled that the war with Iran may be nearing its end and that the ‘military operation’ is progressing well ahead of its initial timetable, an expert said.
On Monday, both WTI and Brent Crude jumped nearly 29 percent to hit an intraday high of nearly USD 119.50 per barrel, after disruptions in the Strait of Hormuz triggered concerns over global supply of exports.
However, the benchmarks later retreated sharply, dropping up to 21 percent to settle at USD 94.77 and USD 98.96 per barrel, respectively.
Trump also said on Monday that he plans to waive oil-related sanctions and deploy the US Navy to escort tankers through the Strait of Hormuz for the smooth passage of crude shipments and to keep the oil prices in check.
Meanwhile, finance ministers of the G7 said the group “stands ready” to release oil from strategic reserves, if necessary, although no action has been taken so far adding more downward pressure on the crude oil prices.
