Crude Oil Prices Fall Over 2% as Hopes of Iranian Supply Ease Market Concerns

MCX Crude Declines After Three-Day Rally​

New Delhi, March 20: Crude oil prices declined sharply in futures trading on Friday, with rates falling by Rs 190 to Rs 8,808 per barrel as traders assessed the possibility of additional Iranian supply entering the global market.

On the Multi Commodity Exchange (MCX), crude oil contracts for April delivery ended a three-day rally, slipping 2.11 percent in a total business turnover of 18,781 lots.

Global Oil Benchmarks Also Trade Lower​

The weakness in domestic crude prices mirrored global trends. In overseas markets, West Texas Intermediate (WTI) futures for May delivery dropped by USD 1.85, or nearly 2 percent, to USD 93.70 per barrel.

Meanwhile, Brent crude for the same contract edged lower by 0.34 percent to USD 108.28 per barrel in New York trading.

Iranian Supply Prospects Weigh on Prices​

Market sentiment remained under pressure amid expectations of easing supply constraints. Analysts pointed to indications of a more pragmatic stance by the United States towards Iranian crude exports, which could bring additional barrels into the market.

Estimates suggest that nearly 140 million barrels of Iranian crude could potentially be reintroduced, influencing global supply dynamics and reducing the geopolitical risk premium currently embedded in prices.

Geopolitical Tensions Continue to Linger​

Despite the price correction, geopolitical risks remain elevated in West Asia. Reports indicate that Israeli Prime Minister Benjamin Netanyahu has agreed to refrain from further actions against Iranian gas fields at the request of the United States, signalling efforts to prevent escalation.

However, the situation around the Strait of Hormuz continues to be a key concern. The route remains impassable, while Iran has issued evacuation alerts in the region, highlighting ongoing uncertainty around oil flows.

Strait of Hormuz Developments Add Uncertainty​

Further complicating the outlook, Iran is considering imposing transit fees on ships passing through the Strait of Hormuz. Lawmakers have proposed tolls for security provisions, a move that could significantly impact trade routes and increase costs for global oil shipments.

Crude Oil Outlook Remains Cautiously Bearish​

In the near term, crude oil prices are expected to remain under pressure, with Brent crude projected to trade within a range of USD 90 to USD 115 per barrel as additional supply potentially enters the market.

However, reports suggest that oil prices could surge beyond USD 180 per barrel if supply disruptions linked to the ongoing US-Israel conflict with Iran persist beyond April, underscoring the fragile balance in global energy markets.