Crude oil prices slip near four month lows on supply relief

Global crude oil markets stayed under pressure on Wednesday, with benchmark prices trading close to four-month lows as improving geopolitical conditions in West Asia and progress in US-Iran negotiations eased concerns over possible disruptions to oil supplies.According to agency reports, international benchmark Brent crude slipped more than 1% to trade near $76 per barrel, while US West Texas Intermediate (WTI) futures declined around 1.5% to hover close to $72 per barrel.
Over the past month, both Brent and WTI have witnessed a sharp correction of more than 20% as concerns over prolonged disruptions to global oil supplies from the Strait of Hormuz gradually eased.Market sentiment improved after indications emerged that oil tankers stranded in the Gulf region following the Iran conflict were preparing to resume operations through the strategically important waterway, which plays a crucial role in global energy trade.
Diplomatic developments involving the US, Iran and other regional stakeholders have further supported expectations of stable oil supplies, reducing the risk premium that had pushed prices higher earlier.The decline in crude oil prices is being viewed positively for India, one of the world’s largest crude oil importers. Lower energy costs could help ease inflationary pressures, support the rupee and improve the country’s broader macroeconomic outlook.
Experts noted that the sharp decline in Brent prices has removed a key external risk factor for the Indian economy. “This excessive volatility is favourable to India, which is growing at a steady pace. The fall in crude oil prices has reduced macro headwinds, while the rupee has stabilised and foreign investor selling appears to have moderated,” they noted.Analysts added that Brent crude hovering around the $76-per-barrel level reflects improving market confidence as geopolitical risks ease and supply concernsreduce.However, uncertainty around the Strait of Hormuz remains a key factor for energy markets. Any disruption to shipping activity through the route, which handles a significant portion of global oil trade, could quickly revive volatility and push crude prices higher.

(Business Correspondent)