New Delhi: Global crude oil prices extended their decline on Tuesday after US President Donald Trump indicated that further military strikes against Iran would not be necessary at this stage. His remarks eased concerns over a prolonged conflict and possible disruptions to oil supplies from the Middle East.
Brent crude futures fell below $92 per barrel, extending Monday’s losses when the international benchmark dropped nearly 6 per cent. US West Texas Intermediate (WTI) crude also weakened, trading close to $86 per barrel.
In early Tuesday trade, Brent was down around 0.75 per cent at $91.88 per barrel, while WTI declined approximately 0.90 per cent to $86.07.
The fall followed Trump’s comments that Washington would hold off on additional military strikes against Iran for the time being. The remarks have raised expectations of possible de-escalation and a diplomatic resolution.
Geopolitical Risk Premium Begins to Ease
Crude markets have experienced sharp swings amid the conflict involving the United States, Israel and Iran. Fears of supply disruptions had pushed prices higher as traders factored in the possibility of a wider regional confrontation.
Trump’s latest comments have prompted traders to reassess the geopolitical risk premium built into oil prices.
Brent has fallen considerably from its six-month high of around $118 per barrel, recorded on October 30. The benchmark also registered its steepest weekly decline since April 2020 last week.
Trump’s remarks followed discussions with Qatar’s Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani. Qatar has been involved in efforts to facilitate negotiations between Washington and Tehran.
Strait of Hormuz Remains a Key Supply Risk
Despite the decline in prices, uncertainty surrounding the Strait of Hormuz remains a major concern for the global energy market.
The strategic waterway carries a substantial share of global oil shipments. Any prolonged disruption to maritime traffic could affect international crude supplies and push energy prices higher.
Attacks involving commercial vessels in and around the Strait have continued, while Washington has indicated that its naval blockade will remain in place. The security situation therefore remains uncertain, leaving traders alert to the possibility of renewed escalation.
Higher OPEC Output Adds to Downward Pressure
Supply-side developments are also weighing on crude prices. OPEC crude oil production rose by approximately 1.38 million barrels per day in October to 22.87 million barrels per day, according to a market survey.
Higher output from major producers, including Saudi Arabia, Kuwait and Iraq, has added to expectations of greater global supply.
Investors are also tracking demand trends and the possibility of a growing supply surplus, which could limit any recovery in prices.
What Lower Crude Prices Mean for India
A sustained decline in international crude prices could provide relief to India, one of the world's largest oil importers. Lower prices can reduce the country's import bill, ease pressure on the current account deficit and potentially improve the financial position of oil marketing companies.
Public sector oil marketing companies, including Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited, closely monitor international crude benchmarks while managing procurement and refining operations.
However, the impact on domestic fuel prices will depend on several factors, including international petroleum product prices, refinery margins, exchange-rate movements, taxes and the pricing decisions of oil marketing companies.
For now, crude markets are responding to the possibility of reduced military escalation. Whether the shift in Washington's position leads to a diplomatic breakthrough or tensions flare up again will remain a key factor shaping oil prices in the coming days.
