Mumbai: Crude oil prices declined on Friday after signs of easing tensions between the US and Iran reduced fears of supply disruptions in global energy markets.
On the Multi Commodity Exchange (MCX), crude oil contracts for June delivery fell by Rs 140, or 1.68 percent, to Rs 8,204 per barrel. The contract recorded a business turnover of 12,005 lots during the session.
The July crude oil contract also moved lower. It slipped Rs 137, or 1.66 percent, to Rs 8,103 per barrel with a turnover of 4,711 lots.
Trump’s Comments Weigh on Oil Market
The fall in crude prices came after US President Donald Trump reportedly paused planned military strikes on Iran’s oil infrastructure.
According to market participants, the decision reduced immediate concerns that a conflict in the Gulf region could disrupt global oil supplies.
Brokerage firm Kotak Neo said Brent crude fell below $89 per barrel while WTI crude slipped below $86 per barrel after Trump's comments regarding progress towards a peace arrangement supported by Saudi Arabia, the UAE, Qatar and Turkey.
The development improved investor sentiment and reduced the risk premium that had recently supported oil prices.
Global Benchmarks Trade Lower
The weakness was also visible in international markets.
Brent crude futures for August delivery declined USD 2.14, or 2.37 percent, to USD 88.24 per barrel.
Meanwhile, West Texas Intermediate (WTI) crude for July delivery fell 2.18 percent to USD 85.80 per barrel.
The decline reflected reduced fears of an immediate escalation in the Middle East, one of the world's most important oil-producing regions.
OPEC Data and Demand Outlook
Despite the decline, some factors continued to support the market.
The latest monthly report from the Organization of the Petroleum Exporting Countries (OPEC) showed that crude production by Declaration of Cooperation countries fell by 190,000 barrels per day in May to 33.13 million barrels per day.
OPEC also maintained that China, India and other developing Asian economies would remain the key drivers of global oil demand growth.
Analysts said oil prices may remain volatile as traders continue to monitor developments in US-Iran negotiations and summer fuel demand trends.
