Crude Oil Futures Tumble 18% as US-Iran Ceasefire Pushes Global Prices Below $100

Crude oil prices plunged sharply on Wednesday, marking one of the steepest single-day declines in recent months, after a temporary ceasefire agreement between the United States and Iran eased fears of supply disruptions. The sharp correction also capped a month of extraordinary volatility in global and domestic crude oil markets.

On the Multi Commodity Exchange (MCX), crude oil futures for April delivery dropped nearly 18 per cent to Rs 8,775 per barrel, after opening at the lower circuit limit of Rs 10,029. The fall came after prices had surged to a record high of Rs 10,990 per barrel just a day earlier, highlighting the volatility seen in recent weeks. Similarly, May delivery contracts fell 15 per cent to Rs 8,012 per barrel as traders rushed to book profits and unwind long positions .

The dramatic fall follows the announcement of a two-week ceasefire and the reopening of the Strait of Hormuz , a key global oil transit route. The easing of geopolitical tensions reduced the risk premium that had been built into prices during the conflict in West Asia, triggering heavy selling pressure across markets.

Over the past month, crude oil prices have witnessed sharp fluctuations. On February 27, the April contract was trading around Rs 6,106 per barrel. As tensions escalated in West Asia, prices rallied nearly 80 per cent, driven by fears of supply disruptions and tightening global supply . The May contract also rose significantly, gaining about 56 per cent during the same period. The surge was further supported by concerns over shipping routes and restricted movement through the Strait of Hormuz.

Globally, oil prices followed a similar trend. Benchmark WTI crude and Brent crude surged to multi-month highs during the peak of tensions, with prices briefly crossing the USD 120 per barrel mark. However, following the ceasefire announcement, both benchmarks witnessed a sharp correction , falling below USD 100 per barrel in Asian trading hours.

Market experts noted that the recent price movement reflects rapid shifts in market sentiment , driven largely by geopolitical developments rather than underlying fundamentals . The near-closure of the Strait had earlier triggered fears of rising inflation and a potential economic slowdown , as higher oil prices impact transportation and production costs worldwide.

Despite the current decline, analysts caution that oil prices remain elevated compared to pre-conflict levels. The recent rally and subsequent fall underline how quickly energy markets can react to global events. According to experts, supply chains and shipping confidence may take time to stabilise fully, even after the ceasefire.

Going forward, the direction of crude oil prices will depend on the durability of the ceasefire and further diplomatic developments. Markets are expected to remain event-driven , with the potential for sharp swings if tensions resurface.

The past month has clearly demonstrated the sensitivity of oil markets to geopolitical risks, with prices moving rapidly between extremes. While the current decline offers temporary relief, uncertainty continues to linger over the global energy outlook.