Brent crude prices plummeted to $72 as shipping transits through the Strait of Hormuz accelerated, easing supply concerns that had intensified amid the blockade. The international benchmark crashed another $3.6 or 4.8% a barrel in trade to $72, marking its lowest level since February 27. For the week, Brent has fallen 10%, while June losses hit 20%, putting it on track for its biggest monthly drop since March 2020, when prices plunged 47%. Meanwhile, US crude futures tumbled $3 or 4.7% a barrel to $68.57, their lowest level in four months. As per Bloomberg, Persian Gulf exports have now recovered to about 75% of pre-war levels, with ships resuming openly transiting the Strait of Hormuz following early progress towards a lasting agreement to end the US-Iran war. Saudi Arabia has begun loading tankers again at its key Ras Tanura terminal in the Persian Gulf, signalling a continued ramp-up in regional oil exports. Key Middle Eastern oil producers, including the United Arab Emirates, Kuwait, and Qatar, have stepped up supply despite facing difficulties in securing enough tankers to transport the additional crude.
The hopes of concluding the 4-month-long US-Iran conflict have reached new heights after war mediators Pakistan and Qatar announced a joint statement on Monday following high-level talks at the Bürgenstock resort in Lucerne, Switzerland. The mediators confirmed that the United States and Iran have agreed on a roadmap to reach a final deal within 60 days, with the agreement formally signed as a 14-point Memorandum of Understanding on June 17. The High Level Committee has agreed upon a roadmap towards reaching a final deal within 60 days, laying the foundation for the immediate commencement of further technical talks, according to the joint statement. The deal includes Iran and the US agreed to end the war on all fronts including Lebanon immediately and permanently, and to refrain from the threat or use of force against each other. The US has committed to stop all types of sanctions against Iran including UN Security Council resolutions, IAEA resolutions, and all unilateral US sanctions as part of the final deal.
The Strait of Hormuz handles nearly 20% of global oil supplies, or roughly 17-20 million barrels per day, making the peace deal's impact significant for global energy markets. During the conflict, an estimated 14 million barrels per day were being shut in from the global market every day the strait was closed, according to the International Energy Agency (IEA). During the peak of the Crisis, the crude prices surged above $100 per barrel to a record high level. The deal includes Iran, in turn, has said that it shall not procure or develop nuclear weapons, while the US and its allies in the region have agreed to create a plan to rebuild Iran's economy and help it develop, worth at least $300 billion. Iran has been allowed to sell oil and petrochemical products again, and some of their money that was blocked is expected to be given back to them.
Market analysts have provided optimistic technical outlooks for the upcoming session. Shrikant Chouhan from Kotak Securities believes the Sensex could extend its rally to 77,500-77,700 levels, while maintaining support above 76,700. Hitesh Tailor from Choice Equity Broking notes that as long as Sensex sustains above 76,000-76,200 support zone, positive momentum is likely to continue. For Nifty 50, Nagaraj Shetti from HDFC Securities suggests the index could challenge immediate resistance of 24,150-24,200 levels and advance towards 24,500-24,600 in the near-term. Ajit Mishra from Religare Broking notes that the Nifty 50 has largely retraced its previous decline, while Bank Nifty has completely engulfed the previous session's dip, with the outperformance of banking stocks reinforcing the strength of the prevailing uptrend. Aakash Shah from Choice Broking reports that India VIX declined by 4.0% to close at 13.38, indicating reduced uncertainty and improving risk appetite among market participants. The NIFTY50 bounced back from lower levels on Wednesday, climbing nearly 200 points, with the index managing to defend the 20-EMA levels of 23,780, which remains crucial support.
Crude oil prices face a potential relief rally, but key support levels will dictate future movements. Brent crude oil futures on the Intercontinental Exchange (ICE) ($72.60/barrel) and crude oil futures in the domestic market (₹6,577/barrel) slumped 9.9% and 9.4% respectively. Brent futures ($72.60) have fallen to a four-month low of $71.93 and are approaching a key support at $71, where a rising trendline also converges. Given this setup, there is a reasonable chance of a corrective rebound from current levels, with such a rally potentially taking Brent futures to $80, and a breakout above this resistance extending the up move to $86. However, if the contract slips below the $71 support, it can trigger a fresh decline towards $65 and subsequently $60. MCX Crude Oil (₹6,577) has breached the support at ₹7,000 and extended the decline to an intra-week low of ₹6,497, with a rebound in Brent crude from the key support at $71 potentially supporting MCX crude oil futures to rise to the ₹7,200-7,300 region. Indian markets opened positively on Thursday morning, with Nifty beginning the day above 24,100 while Sensex was up 295 points at 77,096, reflecting optimism over the US-Iran peace developments.
