Crude futures sink 4% on renewed Hormuz hopes

Cooling geopolitical tensions and reopening hopes for Hormuz triggered sharp crude selloff, boosting sentiment across global equity markets

Crude oil prices plunged more than 4% in futures trade on Monday as hopes of a possible breakthrough between the US and Iran raised expectations of reopening the Strait of Hormuz, easing fears of supply disruptions and cooling global energy concerns.

 On the Multi Commodity Exchange (MCX), crude oil contracts for June delivery fell ₹412, or 4.49%, to ₹8,756 per barrel, with a business turnover of 13,313 lots.

 Analysts said the sharp decline followed reports suggesting that Washington and Tehran have reached a broad framework to end their over two-month-long conflict. 

The proposed understanding is expected to include steps toward reopening the Strait of Hormuz, a crucial global shipping route through which nearly one-fifth of the world’s oil trade passes.

 The Strait has remained largely shut to tanker traffic for weeks amid escalating tensions, triggering a sharp rally in crude prices and intensifying concerns over global inflation and economic growth. Reports indicated that the proposed arrangement may also involve the US lifting its naval blockade on Iranian ports. However, analysts cautioned that a final agreement has not yet been signed and restoring normal oil flows could still take several months. International crude benchmarks also witnessed heavy selling pressure. Brent crude futures dropped below the $100 per barrel mark, falling $4.80, or 4.79%, to $95.41 per barrel. 

  West Texas Intermediate (WTI) crude declined $5.07, or 5.25%, to $91.53 per barrel on the NYMEX.US President Donald Trump said negotiators had been instructed “not to rush into a deal”, adding that the American blockade on Iranian ports would continue until an agreement is “reached, certified, and signed”.

  The sharp fall in oil prices also lifted sentiment across global equity markets. Stocks in Asia and Europe advanced as easing crude prices raised hopes of lower inflationary pressures and reduced risks to global economic growth.

—PTI