US-Iran war: Oil prices declined by more than 2% during early Asian trading on Tuesday after US President Donald Trump announced that he had put a proposed attack on Iran on hold to create room for negotiations aimed at ending the Middle East conflict.
Brent crude futures for July delivery dropped $3.01, or 2.7%, to $109.09 per barrel, while US West Texas Intermediate (WTI) crude for June delivery slipped $1.38, or 1.3%, to $107.28 per barrel. In the previous session, both benchmarks had touched their highest levels since May 5 and April 30, respectively.
The June WTI contract is set to expire on Tuesday, while the more actively traded July contract declined $2.06, or 2%, to $102.32 a barrel.
Back home, crude oil prices on Multi Commodity Exchange (MCX) also witnessed a similar downward movement. MCX crude oil prices fell over 0.9% to ₹9,916 per barrel.
What’s weighing on crude oil prices today?
In a social media post, Trump said that the leaders of Saudi Arabia, Qatar, and the United Arab Emirates had urged the US to “hold off on our planned Military attack of the Islamic Republic of Iran, which was scheduled for tomorrow,” citing ongoing serious negotiations.
Oil prices have been trading higher amid uncertainty surrounding the talks and concerns that a near-complete shutdown of the Strait of Hormuz could further disrupt Persian Gulf energy supplies.
Trump has repeatedly warned of possible renewed military action against Iran, although such threats have not yet materialised, while Tehran has not immediately confirmed the resumption of negotiations.
Trump also said that the US remains ready to launch an attack if a satisfactory agreement is not achieved, though he did not specify any timeline.
Meanwhile, Iranian Foreign Ministry spokesperson Esmaeil Baghaei was quoted as saying by Reuters on Monday that Tehran’s stance had been communicated to the US through Pakistan, but declined to share additional details.
Crude oil prices briefly trimmed gains on Monday after Iran’s semi-official Tasnim News Agency reported that Washington had proposed a temporary exemption from oil sanctions until a final agreement is reached.
Crude oil price outlook
Kaynat Chainwala, AVP – Commodity Research, Kotak Securities, said that barring a ceasefire breakthrough that meaningfully restores Hormuz flows, oil prices are likely to remain volatile and elevated.
“In the short term, WTI crude is likely to face key resistance at $112, and a breakout above this level could drive prices towards $120. On the downside, support is placed at $102. Meanwhile, Brent crude has resistance at $115, and a sustained rise beyond this mark may lift prices past $125, with support seen at $104,” Chainwala said.
On the technical outlook, Ponmudi R, CEO of Enrich Money, said that MCX Crude Oil opened with a strong gap-up and continues to trade above the ₹10,300 mark, reclaiming earlier highs while maintaining support above the ascending trendline pattern.
“Immediate resistance is placed in the ₹10,450– ₹10,500 range, and a sustained breakout above this zone may further strengthen the rally, taking prices towards ₹10,600– ₹10,800. On the lower side, immediate support is seen at ₹10,200– ₹10,100, and a breach below this range could drag prices down to ₹9,850– ₹9,800. The short-term outlook remains cautiously positive amid persistent supply concerns in the Strait of Hormuz,” he added.
(With inputs from agencies)
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