Oil prices dip below $95 as US-Iran war fears ease
What's the story
Oil prices have declined for the second consecutive day, amid hopes of renewed US-Iran negotiations. The potential talks could ease supply disruptions from the Middle East, especially after the recent closure of the Strait of Hormuz. US President Donald Trump hinted that these discussions could resume in Pakistan within two days, raising hopes for a resolution that would restore crude flows.
Market response
Prices drop as conflict continues to affect supply routes
Brent crude futures fell by 52 cents or 0.55% to $94.27 a barrel on Wednesday, extending a 4.6% decline from the previous session. Meanwhile, US West Texas Intermediate crude dropped by $1.04 or 1.1% to $90.24 after losing 7.9% a day earlier. The ongoing conflict has effectively closed the Strait of Hormuz, an important route for transporting crude and refined products from the Gulf to global markets like Asia and Europe.
Supply disruption
Prices likely to remain supported in $85-$90 range
Despite signs of possible diplomatic progress and talk of easing transit curbs, on-ground supply conditions remain disrupted. Brokerage firm Macquarie has predicted that even if tensions ease, oil prices are likely to stay supported in the $85-$90 range. The company also warned that if disruptions extend through April, Brent could still rise to $150 per barrel.
Price forecast
Brokerage firms warn of potential price spikes
Kayanat Chainwala of Kotak Securities has predicted that oil could rise to $120 per barrel in the near term and potentially touch $150 if the conflict continues. Nuvama Institutional Equities supports this view, saying that continued closure of the Strait of Hormuz could push crude prices into the $110-$150 per barrel range. Market experts believe crude may be entering a structurally higher price phase due to ongoing tensions and disruptions in supply chains.