Crude Oil Crashes Up To 18% After US-Iran Ceasefire, Prices Fall Below $100 As Risk Premium Disappears
· Free Press Journal
Mumbai: Crude oil prices saw a steep fall on Wednesday after the US and Iran agreed to a two-week ceasefire. On the Multi Commodity Exchange (MCX), crude oil for April delivery dropped nearly 18 percent to Rs 8,775 per barrel, down from Rs 10,669.
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The fall came after a strong rally in recent days, where prices had touched record highs. The sudden drop reflects heavy selling by traders as fears of supply disruption reduced.
Indian Crude Oil Crashes ₹640 To ₹10,029 Per Barrel On MCX After US-Iran Two-Week Ceasefire AnnouncementGlobal oil falls below USD 100
The impact was seen globally as well. Brent crude fell to around USD 94.96 per barrel, while US WTI crude dropped to about USD 96.67 per barrel. During the day, both benchmarks even slipped close to USD 90 levels.
This sharp decline came after the Strait of Hormuz, a key route for global oil shipments, was reopened. Nearly 20 percent of the world’s oil supply passes through this route.
Why prices crashed?
The main reason behind the fall is the easing of geopolitical tensions. Earlier, fears of war had pushed oil prices sharply higher.
Crude Oil Prices Plunge Nearly 6% On Hopes Of Iran War De-escalation After Trump's "Very Soon" Victory ClaimWith the ceasefire in place, the “risk premium” in oil prices disappeared. Investors started selling their positions quickly, leading to a sharp correction.
Recent rally was very strong
Before this fall, crude oil had seen a massive rally. Prices had jumped up to 80 percent from late February levels due to rising tensions in West Asia.
This shows how quickly oil prices can move based on global events rather than basic demand and supply.
Experts warn volatility may continue
Market experts say the current fall is mainly due to unwinding of extreme positions, not a long-term trend.
Crude Oil Prices Slip 3% From Day’s High On US-Iran De-escalation HopesThey believe supply chains and shipping conditions may take time to fully normalise. If tensions rise again, prices could move sharply in either direction.
What it means for markets?
Lower oil prices are generally positive for economies like India as they reduce inflation and fuel costs.
However, experts caution that markets will remain sensitive to geopolitical developments. Any change in the ceasefire situation could again impact oil prices and global markets quickly.