Ever since America has announced a two-week ceasefire in Iran. Since then there has been a big decline in the prices of crude oil. If we look at the data, there has been a decline of more than 13 percent in the prices of crude oil last week. Which is the biggest weekly decline after the year 2020 i.e. after 6 years. Where the price of Brent crude has come down to $95 per barrel. Whereas the price of WTI still remains at $ 96 per barrel. Crude oil markets have been in severe turmoil since the war began in late February, and prices are still 30 percent higher than before the Middle East war.
Now everyone’s focus is on how durable the ceasefire announced this week will prove to be, and whether a permanent peace can be established so that energy supplies through the Strait of Hormuz can resume. Traffic through this important waterway is still limited mainly to ships bound for Tehran.
Will the discount on Iranian oil continue?
Rapidan Energy Group Chairman Bob McNally said in an interview with Bloomberg Television that the sell-off is unnecessary and is likely to reverse soon. He further said that now that we are facing a nightmare-like situation, people want to believe that all this will end soon, so they are relying on sweet talks and verbal assurances. The oil market is also keeping an eye on whether the US will extend the sanctions waiver period, under which permission is given to buy Russian crude oil already loaded in tankers.
According to experts familiar with the matter, many countries in Asia—where fuel shortages have been seen in recent weeks—are pressuring the US Treasury Department to continue this exemption. The current grace period will end just after midnight Washington time. US Vice President JD Vance is expected to lead talks with Iranian officials in Islamabad from Saturday.
Iran’s attacks continued this week, damaging the region’s energy infrastructure and further disrupting oil supplies. Late Thursday night, Saudi Arabia said that due to these attacks, the flow of oil through its ‘East-West Pipeline’ has decreased. Using this pipeline, Saudi Arabia exports oil through the ‘Red Sea’.
Countries forced to withdraw reserves
The countries of the Middle East, which are highly dependent on crude oil, have now started using their oil reserves. Japanese Prime Minister Sanae Takaichi said that in the month of May, Japan will release oil equal to the requirement of about 20 days from its strategic oil reserves. China’s government refineries have been given the green signal to use their commercial oil reserves.
Whereas India’s largest private refinery has started setting limits on fuel sales at petrol pumps to manage its stocks. Although a two-week ceasefire was broadly in place across the Middle East, the continued closure of the Strait of Hormuz and the ongoing fighting between Israel and Hezbollah in Lebanon threatened to further complicate negotiations.
War of words still continues
Trump posted on social media on Friday that the only power Tehran has is “to extort money from the world in the short term using international waterways” — a reference to Hormuz — and declared that “the Iranians probably don’t realize they have no cards left to play.”
Mohammad-Bagher Ghaslibaf, speaker of Iran’s parliament, said in a post on
Trump told the New York Post on Friday that if talks fail, US warships are being reloaded with “the best ammunition” to launch new attacks. On the other hand, Ukraine’s chief negotiator with Russia said that he sees some progress towards a possible peace agreement.