Ceasefire: Crude oil futures crashes 6%, hit lower circuit
Virendra Pandit
New Delhi: With the US, Israel, and Iran agreeing to a two-week ceasefire proposal in West Asia, crude oil prices retreated sharply on Wednesday, crashing by 6 percent to hit their lower circuit level in futures trade, the media reported.
On the Multi Commodity Exchange (MCX), crude oil futures for the April delivery slumped by Rs.640, or 6 percent, to Rs.10,029 per barrel — its lower circuit limit.
Similarly, the May contract declined by Rs. 565, or 6 percent, to Rs. 8,860 per barrel, also hitting its lower circuit limit amid aggressive selling as easing tensions reduced fears of supply disruptions.
Globally, oil prices retreated after the ceasefire announcement between the US and Iran, which is expected to restore supply flows through the Strait of Hormuz — a key transit route for nearly one-fifth of global oil shipments.
West Texas Intermediate (WTI) crude futures for May delivery tumbled by USD 17.11, or 15.15 percent, to USD 95.84 per barrel, while Brent oil for June contract plunged by USD 14.52, or 13.29 per cent, to USD 94.75 per barrel in New York.
Trade analysts said crude prices cooled after geopolitical risk premiums unwound following the easing of tensions in West Asia.
US President Donald Trump said he would suspend planned military action against Iran after Washington and Tehran agreed to a two-week ceasefire that includes the reopening of the Strait of Hormuz.
Meanwhile, Iranian Foreign Minister Abbas Araghchi indicated that passage through the Strait of Hormuz would be permitted during the period, easing concerns over supply disruptions.
