Oil Prices Update: Global Crude Oil Prices Tumble Up to 7% as US-Iran Pause Eases Supply Concerns

New Delhi: Crude oil prices worldwide suffered their steepest fall in weeks on Monday after there were indications that the United States and Iran have called off military operations that initially fueled the possibility of a full-blown war.

International Brent crude witnessed a decline of more than 7%, down about $7 to trade around $91 per barrel, while WTI crude also fell slightly more than 7%, declining about $6.4 to trade at less than $85 per barrel.

Suspension of War Alleviates Market Anxiety

The fall came on the back of signals from Iran that it will stop its military operations if the United States halts all its operations as well. The development triggered optimism about a possible solution to the tension and decreased apprehensions of disruption to global oil supply.

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During the past few weeks, oil prices had risen considerably, touching $100 per barrel temporarily, due to worries of disruption to supply via the Strait of Hormuz and Bab el-Mandeb Strait, two of the major transit routes for oil shipments in the world.

Geopolitical Threats Linger On

Even after Monday’s fall, analysts pointed out that the geopolitical threats persist. Recent attacks by the Iran-backed Houthi rebels on Saudi Aramco facilities located in the vicinity of Red Sea have emphasized the security threat prevailing in the region.

The analysts added that crude rates are still up close to 40% on the month owing to supply threats related to vital shipping routes. They further said that regular operations through the Strait of Hormuz have not returned to normalcy yet.

Rupee Appreciates Against Dollar

In the wake of lower oil prices, the Indian rupee gained substantially, appreciating 41 paise in early trading to 96.15 per US dollar from previous day’s close of 96.56, which is its strongest start since almost two months.