It has been a strong week for global markets. The biggest reason for this is the prices of crude oil. In which a decline of 11 percent has been seen. The special thing is that after 7 weeks, the biggest weekly decline has been seen in the prices of crude oil in the international market. After the fall in crude oil prices, concerns about inflation have reduced in the minds of common people.
According to experts, the main reason for the fall in crude oil prices is the news of peace agreement between America, Israel and Iran. According to media reports, the ongoing war between the three countries can end any time. Due to which the rise in crude oil prices has slowed down a bit. If experts are to be believed, there may be a further decline in the prices of crude oil in the coming days. Now the biggest question is whether there will be a reduction in the prices of petrol and diesel or not?
Oil prices this week
Brent crude fell nearly 11% this week, its biggest weekly decline in seven weeks. At the same time, American West Texas Intermediate (WTI) fell by more than 9%, which was its biggest weekly decline in six weeks. Both benchmarks reached their lowest levels since mid-April. On Friday, Brent crude futures for July, which had just expired, closed at $92.05 per barrel. It declined by $ 1.66 or 1.8 percent. US crude WTI futures closed at $ 87.36 per barrel, falling by $ 1.54 or 1.7 percent.
Tension on the Strait of Hormuz
During the three-month-long conflict between America and Iran, hopes have been raised many times that a possible solution could be found. With this the ‘Strait of Hormuz’ can reopen. It is an important shipping route, carrying about one-fifth of the world’s oil and gas supplies. Although both sides have indicated that an agreement may be close, there are still differences in their statements regarding the proposed agreement.
US President Donald Trump has once again urged Iran to immediately reopen the strait. Due to the closure of this important waterway, energy prices have increased in global markets. This week, there were huge ups and downs in business. Both Brent and WTI prices fluctuated by up to $6 due to changing signals regarding the possibility of the Strait reopening.
Geopolitical tensions increased further on Thursday. Despite ongoing diplomatic talks between Washington and Tehran, the US launched new strikes on an Iranian military base overnight. According to the semi-official news agency ‘Tasnim’, Iran’s ‘Revolutionary Guards’ later claimed responsibility for the attack on a US air base. However, no information was given about the location of that hideout.
Where are oil prices headed?
Market analysts believe that even if a ceasefire is agreed upon, it may take several months for normal shipping activities to resume through the Strait of Hormuz. It may take even longer for any damaged energy infrastructure to fully recover and start working again.
Earlier this month, Saudi Aramco Chief Executive Officer Amin Nasser warned that stability in global oil markets could be postponed until 2027 due to blockages in the Strait of Hormuz. He said that due to continuous disruptions, the supply of about 100 million barrels of oil could be affected every week. Saudi Aramco is the world’s largest oil producing company.
Morgan Stanley described the oil market as being in a “race against time”, and said the factors that have so far prevented a big rise in crude prices could begin to weaken if the Strait of Hormuz remains closed until June. According to the brokerage, higher crude oil exports from the US and weak demand from China have helped offset some of the supply shortfall.
However, it warned that if the blockages persist beyond the level that the US and China can easily meet, a prolonged closure of the strait could again reduce global oil supplies.
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