US President Donald Trump said Washington and Tehran were “currently in talks” and suggested Iran was keen to strike a peace deal, despite the Islamic Republic’s refusal to hold any direct talks with the United States.
Crude Oil Price on March 25
Brent crude futures were down $6.21, or 5.9%, at $98.28 a barrel by 0058 GMT, after touching a low of $97.57. U.S. West Texas Intermediate crude futures fell $4.67, or 5.1%, to $87.68 a barrel, after slipping to $86.72 earlier. This came after both benchmarks rose nearly 5% on Tuesday before giving up some of those gains in volatile post-settlement trade.
Market participants seem to be reacting to slightly revised expectations of a ceasefire, leading to some profit booking. But the uncertainty surrounding the success of the talks is likely preventing a sharper struggle to take profits.
According to Israel’s Channel 2, the proposal sent to the US included a month-long ceasefire to allow talks with provisions to dismantle Iran’s nuclear program, end support for proxy groups and reopen the Strait of Hormuz.
On the diplomatic front, Pakistan’s prime minister offered to host talks between the US and Iran on Tuesday. Iran, however, denied on Monday that it was engaged in any talks with the US
Despite these incidents, military activity continues, with strikes by the US, Israel and Iran continuing. Sources have also indicated that Washington is preparing to deploy additional troops in the region.
Despite the potential relief, concern around the Strait of Hormuz remains. The ongoing conflict has effectively disrupted nearly one-fifth of global oil and liquefied natural gas shipments through the key waterway.
International brokerage Macquarie has said that even if tensions ease in the near term, oil prices are likely to find support in the $85–$90 range, gradually moving towards $110 until normal flows through the Strait of Hormuz resume. The note added that if disruptions continue into April, Brent could still rise to $150 a barrel.
Looking ahead, crude prices may go higher from current levels. According to Kaynat Chainwala of Kotak Securities, oil could rise to $120 per barrel in the near term and potentially touch $150 if the conflict continues.
Nuwama Institutional Equities echoes the same view. The continued closure of the Strait of Hormuz, which handles about 20 million barrels per day, could push crude prices to $110-150 per barrel.
(disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. (These do not represent the views of The Economic Times)
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