US-Iran war: Oil prices declined nearly 7% on Wednesday, March 25, as renewed diplomatic efforts by the US to end the conflict with Iran gathered momentum, outweighing concerns over additional troop deployments and the continued disruption in the Strait of Hormuz.
Brent crude prices dropped as much as 7% to around $97 per barrel, while West Texas Intermediate (WTI) hovered near $87, reflecting easing fears of prolonged supply disruptions amid signs of potential de-escalation.
Both benchmarks climbed nearly 5% on Tuesday before trimming gains amid volatile post-settlement trading.
Back home, crude oil prices on Multi Commodity Exchange (MCX) followed a similar trend. MCX crude oil prices fell over 4% to ₹8,394 per barrel on Wednesday.
What’s driving crude oil prices?
According to a Bloomberg report, US President Donald Trump said on Tuesday that Washington was making progress toward negotiating an end to the conflict with Iran, while a source indicated that the US had shared a 15-point settlement proposal with Tehran.
Israel’s Channel 2, was quoted as saying by Bloomberg, that the proposal includes a month-long ceasefire to facilitate discussions, along with provisions such as dismantling Iran’s nuclear program, halting support for proxy groups, and reopening the Strait of Hormuz.
The conflict has nearly brought shipments of oil and liquefied natural gas through the Strait to a standstill. The waterway, which typically handles about one-fifth of the world’s crude and gas supply, has seen what the International Energy Agency described as the largest-ever disruption to oil supply.
Iran, however, has stated that foreign vessels may still pass through the route, provided they do not support hostile actions against the country and adhere to regulations set by Tehran. These remarks were conveyed in a letter shared with members of the International Maritime Organisation.
Meanwhile, Israel — which initiated the conflict in late February alongside the US — continued its military operations, launching fresh strikes across Tehran early Wednesday. Channel 12 reported that Israel has reservations about the US proposal and believes Iran is unlikely to accept it.
At the same time, Chinese Foreign Minister Wang Yi urged his Iranian counterpart Abbas Araghchi to begin talks with the US at the earliest to bring the war to an end, according to a Reuters report. China, the world’s largest importer of crude oil, remains a key buyer of Iranian oil.
Additionally, a slight dip in the dollar index to 98.79 has further pressured oil prices.
Crude oil prices near-term outlook
According to Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, volatility is expected to remain elevated as headlines continue to influence sentiment, but as long as Brent sustains below $100 and WTI below $94, the bias points towards a gradual downside drift.
“While the ground situation remains fluid—with ongoing bombardments and troop movements—the market is reacting to the possibility of de-escalation, triggering a sell-off. On the domestic front, ₹8,600– ₹8,800 remains a key resistance zone, while ₹8,300 and ₹8,000 are important support levels to watch,” Banerjee said.
Meanwhile, Aamir Makda, Commodity & Currency Analyst at Choice Broking, said that key support would be at 100-EMA level on 4-hourly chart placed at 7793 and breakout of this mark, will boost downside pressure in crude oil price.
“On the other hand, resistances would be at 8699 – 9335 respectively. The daily chart paints a bearish picture, with the RSI retreating toward 50. Furthermore, the MACD has formed a bearish crossover paired with expanding negative histograms, reinforcing the overall negative bias for the commodity,” Makda added.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
