Oil prices drop to two-week low as Israel-Iran ceasefire takes effect
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New Delhi: Oil prices plunged over 5 per cent in the international market on Tuesday, reaching a two-week low, following Israel’s announcement that it had agreed to US President Donald Trump’s ceasefire proposal with Iran.
The benchmark Brent crude price fell by nearly $4 to settle at $67.7 per barrel, while US West Texas Intermediate (WTI) crude dropped by $3.75 to $64.76 per barrel. The sharp decline was driven by easing fears of supply disruptions amid Middle East tensions.
Israeli Prime Minister Benjamin Netanyahu stated that Israel had achieved its objective of “eliminating” Tehran’s nuclear and ballistic missile threat and would now honour the ceasefire initiative put forward by President Trump. The ceasefire comes after 12 days of intense aerial strikes, which had raised concerns about a potential wider conflict in the Middle East, a critical region for global oil exports.
President Trump confirmed the ceasefire is now in effect between Israel and Iran, signalling a significant de-escalation in hostilities.
Iran, which produces approximately 3.3 million barrels of crude oil per day—around 3 per cent of global supply—exports 1.5 million barrels daily. China accounts for 80 per cent of these exports, followed by Turkey. Prior to the ceasefire, Iran had issued threats to block the Strait of Hormuz, a crucial maritime passage through which nearly 20 per cent of the world’s oil—primarily from Saudi Arabia and the United Arab Emirates—is transported. The implementation of the ceasefire has eased concerns over this potential blockade.
India, which imports nearly 85 per cent of its crude oil needs, remains sensitive to fluctuations in oil prices. A spike in prices typically leads to a higher oil import bill, fuels inflation, hampers economic growth, and weakens the Indian rupee against the US dollar due to increased foreign exchange outflows.
Amid the volatile geopolitical backdrop, Union Minister for Petroleum and Natural Gas Hardeep Singh Puri had, on Sunday, reassured the public that the government was closely monitoring developments in the Middle East. He dismissed fears of immediate disruptions in fuel supplies caused by the Israel-Iran conflict.
Puri highlighted that India’s state-run oil marketing companies—Indian Oil, Bharat Petroleum, and Hindustan Petroleum—have sufficient reserves to meet demand for several weeks. He emphasised that supply chains remain intact through various routes and assured that all necessary steps would be taken to ensure stable fuel availability for Indian citizens.
In a move to strengthen long-term energy security, India has diversified its crude sources, increasing imports from countries such as Russia and the United States. The government has also built up strategic petroleum reserves to cushion the economy during supply shocks or sharp price increases.
The minister underscored the importance of these reserves, particularly during times of geopolitical uncertainty. India’s strategic storage facilities include a 2.25 million metric tonne (MMT) capacity at Pudur, 1.33 MMT at Visakhapatnam, and 1.5 MMT at Mangalore.
These reserves can be tapped in emergencies or when global oil prices soar, providing critical support to national oil companies and helping maintain price stability for consumers.
With IANS inputs