Crude oil prices have once again taken a turn in the international market. After seeing a huge fall of more than seven percent on Monday, suddenly a sharp jump has been recorded in the prices. Global benchmark ‘Brent Crude’ has crossed $99 per barrel, while ‘West Texas Intermediate’ (WTI) has crossed $92. Its direct impact was visible in the domestic market also. On Multi Commodity Exchange (MCX), crude oil jumped 1.90 percent to Rs 8,779 per barrel. The reason behind this sudden boil is the new American military attacks in Iran. This latest tension has dashed the hopes that an interim agreement could soon be reached between America and Iran.
Why did the atmosphere suddenly deteriorate amidst expectations of agreement?
Talks are going on between Iran and America to reopen the Strait of Hormuz. Meanwhile, the US Army targeted boats trying to deploy in Iran’s missile launch pads and mines. After this action of the American Central Command, panic has spread in the crude oil market regarding the supply. However, according to a Bloomberg report, US Secretary of State Marco Rubio says that talks on the draft of the initial agreement between the two countries will continue for “a few more days”. Due to this uncertainty, the market is not able to decide whether the oil supply from the Middle East will remain smooth or not.
Peace talks entangled in nuclear dispute
Crude oil prices fell sharply earlier this week after Trump said talks were “going well.” However, he also warned that if the talks failed, more military actions could be taken. At present, a ceasefire of about two months is being discussed between America and Iran. Under this possible agreement, America will ease its blockade, in exchange for which Iran will reopen the Strait of Hormuz. The main point of the dispute is that Iran wants to maintain its control over the merchant ships passing through this strategic sea route. This condition is not acceptable to America, Arab countries and Europe at all.
Making the situation more clear, Trump has emphasized that Iran’s enriched uranium should be destroyed in its own country or the material should be handed over to America. Washington has cited Iran’s nuclear program as the main reason for entering into this conflict with Israel. He argues that Tehran’s pursuit of nuclear weapons is a serious global threat.
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