Synopsis
Oil prices are up sharply at the start of the new financial year. Supply problems and damage caused by the Iran-US war are driving up prices. However, leaders of both countries have expressed optimism that the conflict will end soon. This could impact future oil prices, although some analysts expect them to remain high.
ETMarkets.comOil prices jumped nearly 2% at the start of the new fiscal year, driven by supply constraints and infrastructure damage caused by Iran’s protracted war with the United States in Israel. Oil price jumped about 2% on Wednesday at the start of the new fiscal year, weighed down by supply constraints and infrastructure damage resulting from Iran’s protracted war with the United States and Israel. The current sharp rise in oil prices comes despite growing hopes that the raging war will finally end following comments from the countries’ leaders.
Brent crude futures surged over 1.8% to trade at $105.8 per barrel, as seen at 7:40 am IST. Front-month Brent crude futures hit a record monthly gain of 64% in March, according to Reuters citing LSEG data dating back to June 1988. WTI crude, meanwhile, jumped nearly 1.7% to $103 a barrel. Oil prices held above the crucial $100 mark for most of March after the close of Strait of Hormuzand this trend has now spread into April.
Oil production in the Organization of the Petroleum Exporting Countries (OPEC) fell by 7.3 million barrels per day in March from the previous month, according to a Reuters survey released on Tuesday. This shows the scale of the oil crisis which is shaking world markets.
Will the Iran-US war end soon?
However, investors are increasingly hopeful that this raging war will end soon. US President Donald Trump said the country could end its military attacks on Iran within two to three weeks and that Tehran was not obliged to reach a deal as a precondition for easing the conflict. “We will be leaving very soon,” Trump told reporters at the White House on Tuesday.
Iranian President Masoud Pezeshkian, meanwhile, said his country had the “necessary will” to end the ongoing war with Israel and the United States, but was seeking guarantees that the conflict would not be repeated.
“We possess the necessary will to end this conflict, provided that the essential conditions are met, including the guarantees required to prevent the repetition of aggression,” Pezeshkian said in a telephone interview with the president of the European Council, according to a statement from his office, reiterating a key demand from Tehran.
U.S. Secretary of State Marco Rubio said Washington could see the “finish line” in the Iran war, now in its fifth week, and that the United States will need to reexamine its ties with NATO after the conflict.
What awaits us?
Even if the war eases in the short term, oil prices may not drop anytime soon. Ambit Institutional Equities, in its report, said that although geopolitical tensions If the situation calms down, oil prices will remain high, with $80 the new norm for Brent due to infrastructure damage, geopolitical risk premiums and inventory replenishment.
(With contribution from agencies)
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)
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