New Delhi: Global crude oil prices declined by almost 1 per cent on Wednesday as investors and traders assessed the possibility that the Iran conflict would end and the Strait of Hormuz would reopen.
International oil benchmark Brent crude fell 0.72 per cent to $78.39 per barrel, while US West Texas Intermediate (WTI) crude slipped nearly 1 per cent to $75.35.
The selling pressure came after details of the US-Iran interim agreement to end the West Asia conflict emerged, with US President Donald Trump stating that Tehran would not obtain nuclear weapons and a US official saying that Iran would be allowed to sell oil upon signing the agreement.
The memorandum of understanding signed this week extends the ceasefire announced in April for another 60 days, allowing the warring sides to negotiate a permanent truce.
Under the agreement, the US will lift its blockade of Iran’s ports, while Tehran will allow oil tankers and other maritime traffic through the Strait of Hormuz, which it has effectively blocked since the US and Israel launched strikes on February 28.
Meanwhile, the Indian rupee gained 31 paise on Wednesday. The domestic currency was trading at 94.29 against the US dollar, compared with 94.56 in the previous session.
According to experts, another distinct positive trend is the tapering of FII outflows. This trend is likely to continue since the rupee has been steadily strengthening and could appreciate further.
“The sharp correction in Brent crude to $79 and expectations of massive capital flows into India through the FCNR(B) deposit route can lead to further appreciation in the rupee, which, in turn, will further dissuade FIIs from selling,” they added.
They further noted that FIIs may even turn buyers in anticipation of further rupee appreciation. This could impart resilience to the market.
(IANS)
