New Delhi, May 30: Global crude oil prices have dropped to a six-week low following reports of a potential agreement to extend the ceasefire between the United States and Iran, along with news of the possible reopening of the Strait of Hormuz.
The July delivery contract for West Texas Intermediate (WTI) crude closed down by 1.73% at $87.36 per barrel, while the August contract for the international benchmark Brent crude fell by 1.7% to $91.12 per barrel.
According to reports, U.S. President Donald Trump stated that he would make a final decision on the proposed initial agreement to extend the ceasefire for 60 days. Meanwhile, Iran’s Foreign Ministry has indicated that no final agreement has been reached, and communication between both parties is ongoing.
The additional risk premium in crude oil prices for July has decreased as hopes for a diplomatic resolution have risen. However, analysts caution that several challenges remain before oil supply from the Strait of Hormuz can return to normal.
Experts note that the removal of mines in the waterway, restarting shut-in oil fields, and repairing damage to energy infrastructure from drone and missile attacks could delay the full restoration of oil supply.
An official statement revealed that the Marshall Islands-flagged tanker Nisos Keros, carrying approximately 270,000 metric tons of crude oil for India, has safely crossed the Strait of Hormuz and is expected to arrive in Visakhapatnam on June 3.
The government has assured that all oil refineries in the country are operating at high capacity and have sufficient crude oil reserves. Additionally, adequate stocks of petrol and diesel are being maintained.
To meet domestic LPG demand, refineries have ramped up gas production to approximately 52,000 metric tons per day.
The government has instructed states to monitor and review petrol and diesel consumption patterns at the district level. Furthermore, inspections and enforcement activities in sensitive areas and key transport and industrial corridors have been intensified to prevent unauthorized purchases of diesel from retail petrol pumps by industrial and commercial consumers.
Immediate punitive action has been directed against those violating regulations.