Crude oil prices in India slipped 6% in early trade on Monday, following a slump in international oil prices, amid optimism over the US-Iran peace talks and reopening of the crucial Strait of Hormuz.
MCX crude oil price for June futures opened 4% lower at ₹8,802 per barrel as against its previous close of ₹9,168 level. Oil price dropped as much as 5.95% to a low of ₹8,622 per barrel.
At 9:55 AM, MCX crude oil rate was trading 4.94% lower at ₹8,715.00 per barrel.
In the international market, Brent crude futures declined 5.7% to $97.69 a barrel, while US West Texas Intermediate were at $90.85 a barrel, down 6%. Both contracts touched their lowest since May 7 earlier in the session.
The fall in crude oil prices globally came as optimism grew that the United States and Iran were moving closer to a peace deal. However, both the countries remain at odds over key issues, such as blockades on the Strait of Hormuz.
US President Donald Trump on Saturday said Washington and Iran had “largely negotiated” an understanding on a peace deal that would reopen the Strait of Hormuz.
However, the two sides remain at odds on several difficult issues, with Trump saying on Sunday he had told his representatives not to rush into any deal with Iran as his administration played down expectations of an imminent breakthrough in the three-month-old war.
“A full reopening of the Strait of Hormuz would provide significant relief for major Asian economies and could push oil prices substantially lower, considering the waterway carries roughly one-fifth of global oil and LNG shipments,” said Jigar Trivedi, Senior Research Analyst at IndusInd Securities.
The Iran conflict and the dual blockade of Hormuz have severely disrupted global energy markets, forcing Middle Eastern producers to halt millions of barrels per day in crude output, he noted.
The elevated crude oil prices led Indian oil marketing companies to hike retail petrol and diesel prices four times in less than 10 days. On Monday, petrol prices were raised by ₹2.61 per litre, taking rate in Delhi to ₹102.12, while diesel prices were increased by ₹2.71 per litre.
Crude Oil Price Outlook
According to Trivedi, the outlook for MCX crude oil prices remains weak for the intraday session.
“MCX crude oil price for June contract has support near ₹8,600 per barrel, while on the flip side, resistance is placed at ₹8,800 per barrel,” said Trivedi.
(With inputs from Agencies)
