New Delhi, March 10 Crude oil prices plunged by over 8 per cent to Rs 8,069 per barrel in futures trading on Tuesday, following comments from US President Donald Trump that the conflict with Iran may be nearing its end, easing fears of prolonged supply disruptions.
Ending a three-day rally, crude oil for March delivery depreciated by Rs 719, or 8.18 per cent, to Rs 8,069 per barrel on the Multi Commodity Exchange (MCX).
Similarly, the April contract on the MCX fell by Rs 531, or 6.21 per cent, to Rs 8,017 per barrel in 6,359 lots.
The fall came after crude oil prices had witnessed extreme volatility. On Monday, the March contract had surged more than 26 per cent to hit a record high of Rs 10,549 per barrel.
However, prices later pared gains sharply and closed nearly 17 per cent lower at Rs 8,788 per barrel, down by Rs 1,761 from the peak level.
Analysts said that the fall in oil prices was due to easing geopolitical tensions, which had reduced the risk premium that had pushed energy rates sharply higher in the previous session.
Globally, West Texas Intermediate (WTI) crude oil for April delivery fell by USD 6.65, or 7.02 per cent, to USD 88.12 per barrel, while Brent Crude for May contract was trading 6.1 per cent lower at USD 92.92 per barrel in New York.
WTI crude futures fell below USD 90 per barrel after surging to nearly USD 120 in the previous session, as US President signalled that the war with Iran may be nearing its end and that the military operation is progressing well ahead of its initial timetable, Jigar Trivedi, Senior Research Analyst at IndusInd Securities, said.
On Monday, both WTI and Brent Crude jumped nearly 29 per cent to hit an intraday high of USD 119.48 and 119.50 per barrel, respectively, after disruptions in the Strait of Hormuz, triggered concerns over global supply of exports.
However, the benchmarks later retreated sharply, dropping up to 21 per cent to settle at USD 94.77 and 98.96 per barrel, respectively.
Trump also said on Monday that he plans to waive oil-related sanctions and deploy the United States Navy to escort tankers through the Strait of Hormuz for the smooth passage of crude shipments and to keep the oil prices in check.
Meanwhile, finance ministers of the G7 said the group "stands ready" to release oil from strategic reserves if necessary, although no action has been taken so far, adding further downward pressure on crude oil prices.