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These days, a breath-taking scene is being seen in the international commodity market and global energy sector. While yesterday morning the prices of crude oil were skyrocketing due to the fear of war breaking out in the Gulf countries, late night a big and positive announcement by US President Donald Trump changed the entire trend of the market. Trump has indicated that a historic peace agreement can be signed between America and Iran this weekend itself.
In anticipation of this major diplomatic success, the fear of disruptions in global energy supply suddenly ended, due to which a huge fall of more than 5 percent was recorded in the prices of crude oil in the global market.
Prices reached lowest level in two months
After this major reshuffle, both the major benchmarks of crude oil have come close to their lowest levels in two months. You can easily understand this change happening at the international level from the table given below:
Note: Brent and WTI for August delivery are trading in the same range in Asian markets.
Military attack in the morning, diplomacy in the evening: this is how the market situation changed.
This ups and downs in the crude oil market was like a roller-coaster ride. In fact, after Trump accused Tehran of deliberately delaying talks related to interim peace arrangement, the US military carried out airstrikes on Iran for the second consecutive day on Thursday. As soon as the news of these attacks came, there was a huge jump of 2.5% in Brent crude oil and in a moment it $95 per barrel crossed.
Initially, Trump had openly threatened to completely destroy Iran’s oil infrastructure and take even stricter action in the future. But after a few hours, his tone changed and he claimed that both the countries are very close to a big deal. However, there has been no official confirmation of any approval to this draft agreement yet from Iran’s top leadership or Tehran media.
Movement resumed from the Strait of Hormuz
At present the international market is counting on a diplomatic solution to this dispute more than war. This controversy is important because it strait of hormuz The flow of oil had completely stopped. This sea route is considered the most important lifeline for the shipment of crude oil, fuel and natural gas around the world. According to Trump, under this agreement, Iran will make a written promise not to make nuclear weapons in the future, in return for which the Strait of Hormuz will be completely safe and restored for the movement of ships. Some oil tankers have also started moving out of the Persian Gulf.
Huge shortage of oil stocks around the world
Even though the hope of a peace agreement may have led to an immediate fall in prices, market experts believe that it will take time for the situation to become completely normal. Due to the war of the last several weeks, energy infrastructure has been damaged and production has come to a complete halt in many places.
At present, oil inventory across the world has reached its lowest level:
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Singapore crisis: Commercial fuel stock reduced in Singapore Lowest level since 2013 Has reached.
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US Crude Inventories: During the last few weeks, there has been a huge and rapid decline in the reserve stock of crude oil in America also.
In such a situation, if this peace agreement does not turn into reality this weekend, then due to low inventory, we may once again see a big and dangerous jump in the prices of crude oil. At present, this decline from the international market is a big relief news for Indian oil companies and domestic consumers.