Crude Oil Pulls Back on Ceasefire Hopes

Mumbai, March 25: COMEX Crude Oil traded at $87.47, down $4.88 or 5.28% on Wednesday, as diplomatic signals offered markets a brief moment of relief.

The trigger: reports that the U.S. is pushing for a one-month ceasefire with Iran, including a 15-point proposal covering the dismantling of Iran’s nuclear programme and the reopening of the Strait of Hormuz. President Trump said Iran wanted to make a deal and had agreed not to pursue a nuclear weapon, though Iran denied being part of any direct talks.

The pullback is sharp, but the context matters. Crude had surged to nearly $120 a barrel earlier this month — close to its all-time high of $147 set in July 2008 — as the US-Israeli war on Iran triggered the largest oil supply disruption in the history of the global energy market.

The Strait of Hormuz remains the central pressure point. The war has all but halted shipments of oil and gas through the Strait, which typically carries about one-fifth of the world’s supply. Gulf countries have cut total oil production by at least 10 million barrels per day, with global supply projected to plunge by 8 million barrels per day in March alone.

To cushion the blow, IEA member nations agreed on March 11 to release a record 400 million barrels from strategic stockpiles — the largest coordinated emergency release ever. Saudi Arabia has also ramped up exports through its Red Sea port to compensate partly for Hormuz losses.

Analysts remain cautious. Even if a ceasefire is implemented and Hormuz flows resume, it is not clear that all shut-in production will restart until there is greater certainty about the durability of any agreement. Investing.com Drone strikes continued Wednesday, with Kuwait’s airport fuel infrastructure hit.

Source: https://comexlive.org/