Iran Proposal Triggers 3% Crude Oil Price Dip Amid Hopes of Hormuz Reopening

Crude oil futures on the Multi Commodity Exchange (MCX) fell by 3% to Rs 8,572 per barrel as a fresh diplomatic signal from Iran raised hopes of reopening the Strait of Hormuz and eased fears of prolonged disruptions to global energy supplies.

The latest selling came after reports that Iran has proposed reopening the Strait of Hormuz within seven days if the United States lifts its blockade on Iranian ports.

On the MCX, crude oil futures for October delivery declined by Rs 264, or 3%, to Rs 8,572 per barrel. The contract had lost Rs 903, or 9.3% in the past four sessions.

Kaynat Chainwala, AVP Commodity Research, Kotak Securities, said that crude extended losses on Tuesday with Brent slipping below USD 99 a barrel to the lowest level in two weeks following the report that Iran has proposed reopening the Strait of Hormuz within seven days if the US lifts its blockade on Iranian ports.

Chainwala added that until a concrete outcome emerges from this week's meetings, crude's risk premium looks vulnerable to further unwinding, though stalled talks could just as quickly reverse the move.