Oil markets experienced a dramatic 10% crash after President Trump announced that Iran has agreed to "never close the strait" again, with Iran's foreign minister confirming the Strait of Hormuz is "completely open" for commercial ships during the ceasefire period. According to GasBuddy's Patrick De Haan, this represents a huge decline that brings oil prices back to levels well above pre-war levels, though still significantly below recent peaks. The reopening comes after conflicting messages in US-Iran relations, with both sides sending flip-flops in their communications, including Iran's initial announcement to move ships during the ceasefire period before reversing the decision.
The dramatic oil price decline has provided immediate relief to global markets, with Brent crude now trading in the $95-98 per barrel range - a significant drop from the 7% spike seen earlier amid ceasefire deadline fears. As reported by GasBuddy's Patrick De Haan, the national average could fall below the $4 per gallon mark again and potentially reach $3.85 within a week or two, with decreases of 5-15 cents every week or two expected for the next few weeks. However, travelers flying this summer are still set to face higher prices due to airlines increasing fares due to higher jet fuel costs, limiting the full impact of the oil price decline.
Indian markets are expected to open on a cautious note as US-Iran geopolitical tensions continue to create volatility, though the dramatic oil price decline provides some relief. According to The Hindu BusinessLine, Gift Nifty is currently ruling at 24,470 (7:30 AM IST), indicating a gain of approximately 100 points over Friday's Nifty futures closing. The cautious sentiment reflects ongoing concerns about geopolitical developments and their potential impact on global markets, though the Hormuz Strait reopening has significantly reduced immediate supply disruption fears.
International leaders meeting in Paris have cautiously embraced the news, with UK Prime Minister Kier Starmer stating they welcome the announcement but need to ensure it's both lasting and a workable proposal. The reopening could bring long-awaited relief to Americans at the pump, with experts expecting the national average to fall below $4 per gallon again. However, analysts note that while the Hormuz Strait reopening provides immediate relief, the situation remains fluid given conflicting reports from Iranian officials about the details of the agreement.
Rupee stability has provided some support to market sentiment, with the currency strengthening from the low of ₹95.30 to the dollar touched on March 30 to ₹92.85 to the dollar on April 17. According to The Hindu BusinessLine, FPIs turned buyers, though marginally, over the last three trading days in anticipation of rupee stability. Analysts suggest that a crash in Brent crude to around $90 on news of the opening of the Hormuz Strait will further aid the rupee in the near term, potentially creating an environment where FPIs may turn buyers in India.
