New Delhi, March 20 Crude oil prices declined by Rs 190 to Rs 8,808 per barrel in futures trading on Friday as traders weighed the prospects of additional Iranian supply despite lingering geopolitical tensions in West Asia.
On the Multi Commodity Exchange, crude oil for the April delivery ended its three-day rally, declining by Rs 190, or 2.11 per cent, to Rs 8,808 per barrel in a business turnover of 18,781 lots.
Analysts said the fall in oil prices was driven by hopes of softening geopolitical risk premium following indications of a more pragmatic approach by the US towards Iranian crude supplies.
In overseas trading, West Texas Intermediate (WTI) futures for May delivery fell by USD 1.85, or nearly 2 per cent, to USD 93.70 per barrel, while Brent Oil for the same month contract slipped by 0.34 per cent to trade at USD 108.28 per barrel in New York.
The dip in crude prices, now around USD 107 per barrel for Brent against a peak of USD 119, reflects a 'relief valve' moment, though tensions remain high, Aamir Makda, Commodity & Currency Analyst at Choice Broking, said.
He added that the decline is attributed to the US adopting a more pragmatic approach, as Treasury Secretary Scott Besant suggested that around 140 million barrels of Iranian crude could be brought back into the market.
Israeli Prime Minister Netanyahu has agreed to refrain from further actions against Iranian gas fields at the US request, indicating a desire to avoid a total collapse.
However, Makda cautioned that risks remain elevated as the Strait of Hormuz is still impassable, with Iran escalating evacuation alerts in the region, suggesting that any hope for a secure oil flow is still precarious.
Additionally, Iran is considering imposing transit fees on ships passing through the Strait of Hormuz, as lawmakers propose tolls for security provision, a move that could alter trade dynamics and add another layer of uncertainty to global oil markets.
On the outlook, Makda said Crude oil prices would remain cautiously bearish in the near term, with Brent expected to trade in the range of USD 90 to 115 per barrel as additional supply potentially enters the market.
According to reports, oil prices could soar past USD 180 per barrel if supply disruptions stemming from the US-Israel war on Iran last beyond April.