Crude oil prices rose more than 6% after Donald Trump’s statement that the temporary ceasefire with Iran was ending, which again increased tension in the global energy market.
Trump-Iran Tension: After US President Donald Trump said that the temporary ceasefire with Iran is now over, there was a sharp increase in the prices of crude oil in the international market. After this statement, there is a possibility of tension increasing again in the Middle East, one of the world’s largest energy producing regions.
Brent and WTI crude rose by more than 6%
Brent crude futures rose more than 6% in London trading. At the same time, there was a sharp rise in the prices of West Texas Intermediate (WTI) crude. Trump said during a press conference held in Ankara that he is no longer in favor of any new agreement with Iran. However, he also said that the negotiating team on his behalf will continue talks with Iran, but according to him this effort will probably prove to be a waste of time.
Gold and silver ETFs declined
Amid the rise in oil prices, there was pressure in the precious metals market. Due to the fall in the prices of gold and silver, a decline of about 3% was recorded in the ETFs (exchange traded funds) related to them.
Brent crude reached $ 78.56 per barrel
The price of ICE Brent crude oil September futures rose to $ 78.56 per barrel. This rise has once again increased the fear of instability in the already sensitive global energy market. Earlier during the second quarter, there was a significant decline in crude oil prices due to reduction in regional tensions. Now due to changing circumstances, the direction of the market seems to be changing again.
Increased concern over the Strait of Hormuz
The Strait of Hormuz is once again in the news due to increasing tension in the Middle East. This sea route connects the oil producing countries of the Persian Gulf with the rest of the world markets. If tensions in the region increase further, it may be challenging for shipowners and oil producing countries to continue supplying oil through this route. This may also affect global energy supply and oil prices.
The rise went against market expectations
This surge has come at a time when many market experts were expecting softening of oil prices. Many speculators had taken large short positions in Brent crude futures, meaning they were betting on a fall in prices. Investors also sharply reduced their net-bullish positions as prices rose after the Strait of Hormuz reopened to normal in recent weeks. This decrease was considered to be the sharpest after the Corona epidemic of 2020. In such an environment, the sudden rise in the oil market after Trump’s statement again increased the concerns of investors and the energy market.
Sensex fell by more than 1800 points
Seeing war breaking out once again between America and Iran, the stock market crashed on Wednesday. After Trump’s statement, BSE Sensex fell 1887 points to 76292 points at 3 pm. At the same time, Nifty is also trading around 23822 with a fall of 576 points.