NEW DELHI: Global oil prices slipped around 1% on Friday morning after reports that Iran and the US have agreed to extend their fragile ceasefire, easing immediate supply disruption fears.
A report by American news website Axios on Thursday said US and Iranian negotiators have reached a 60-day memorandum of understanding (MoU) to extend the ceasefire and open talks on Iran’s nuclear programme, though US President Donald Trump has not yet given final approval. Iran has also not confirmed its acceptance, it said.
At 8.40 am, India time, the July Brent contract on the Intercontinental Exchange traded at $92.86 a barrel, down 0.91% from its previous close. The July West Texas Intermediate contract on Nymex fell 1.24% to $87.73 a barrel.
Axios, citing US officials, reported that the proposed 60-day MoU would state that shipping through the Strait of Hormuz will be “unrestricted”. It added there would be no tolls and Iran would be required to remove all mines from the strait within 30 days.
It report added that the US naval blockade would be lifted, but only in proportion to the restoration of commercial shipping.
The decline followed a volatile session a day earlier, when prices jumped after US strikes on Iran targeted a military site in Bandar Abbas, a strategic port city, before easing later in the evening.
The strikes took place during the ongoing ceasefire between Tehran and Washington and were described by the US as “self defence”. In response, Iran’s Islamic Revolutionary Guard Corps (IRGC) said it targeted an American air base in the region. The exchanges raised concerns over a possible derailment of ongoing talks.
Markets are closely tracking developments around the Strait of Hormuz, a key chokepoint for roughly a fifth of global oil and liquefied natural gas trade. Any reopening or de-escalation in the area is seen as a major stabilizing factor for prices.
For India, which relies on imports for about 90% of its crude oil needs, the conflict has added pressure to an already import-dependent energy bill. The Indian crude oil basket—comprising Sweet grade (Brent Dated) and Sour grade (Oman & Dubai average) crude imported by domestic refiners—stood at $102.05 per barrel on 26 May.
So far in May, the Indian crude oil basket has averaged $107.45 a barrel, compared with $64.04 in the same month last year. The FY26 average stood at $70.99 a barrel.
While the government has said supplies of crude oil, petrol and diesel remain adequate, it has acknowledged instances of shortages in some parts of the country, attributing them to panic buying and a shift of bulk industrial consumers to retail fuel outlets.
In a statement on Wednesday, the ministry of petroleum and natural gas said industrial consumers, including factories and fleet operators, appear to have found an arbitrage opportunity in the government’s consumer-friendly retail fuel pricing, which is intended to benefit households and small users.
“It has been observed that private oil marketing companies are experiencing a decline of approximately 38% in high-speed diesel (HSD) offtake during the current month, across both retail outlets and bulk customers due to higher rates fixed by them. This volume is shifting entirely to PSU oil marketing retail outlets. Coupled with this, PSU bulk customer volumes have also recorded a decline of approximately 29%, which is also migrating to retail outlets,” the petroleum ministry said in a statement.
