Global oil prices declined on Friday morning as the 10-day ceasefire between Israel and Lebanon came into effect late on Thursday.
Further weighing on prices was US president Donald Trump’s statement that Iran and the US are “very close” to a deal and that he may travel to Pakistan if an agreement is signed.
“We’re very close to making a deal with Iran…There’s a very good chance we’re going to make a deal,” he told reporters on Thursday.
At 6:47 am, the June contract of Brent on the Intercontinental Exchange was trading at $98.41, down 0.99% from its previous close, while the May contract of West Texas Intermediate (WTI) on the NYMEX fell 1.37% to $93.39 a barrel.
Ceasefire effect
Trump had on Thursday announced a and said that Israeli prime minister Benjamin Netanyahu and Lebanese president Joseph Aoun would be invited to the White House for peace talks — a first since 1983.
Trump also appealed to Hezbollah, an Iran-backed militia in Lebanon, to abide by the ceasefire. The truce has raised hopes for another round of talks and a possible peace deal between the US and Iran, as Tehran had demanded a halt to the attacks on Lebanon.
Supply squeeze
However, energy supplies remain tight amid the closure of the Strait of Hormuz and the US naval blockade of Iran.
Fatih Birol, executive director of the International Energy Agency (IEA), has described the ongoing situation as “the largest energy crisis we have ever faced” due to the lack of supplies through the Strait of Hormuz, a key transit route for one-fifth of global oil and gas supplies.
Speaking to The Associated Press, Birol said Europe has “maybe six weeks or so” of remaining jet fuel supplies, while warning of possible flight cancellations “soon” if oil flows remain blocked due to the war.
“In the past there was a group called ‘Dire Straits.’ It’s a dire strait now, and it is going to have major implications for the . And the longer it goes, the worse it will be for the economic growth and inflation around the world,” he told The Associated Press.
Impact on India
For India, the disruption carries significant risks. The country imports nearly 90% of its crude oil requirement, making it highly vulnerable to supply shocks and freight spikes stemming from tensions around the Strait of Hormuz.
Amid efforts to ensure uninterrupted energy supplies, and liquefied petroleum gas, despite the end of the waiver on US sanctions, as reported by Mint earlier.
The strain is more visible in cooking gas supplies. India imports up to 65% of its annual LPG requirement of about 33 million tonnes, with nearly 90% of those imports dependent on West Asia.
Shipping disruptions had triggered concerns of an , prompting refiners to ramp up domestic production and prioritize household supplies.
While the petroleum ministry has said no dry-outs have been reported at distributorships, panic bookings and long queues were seen in recent weeks, underscoring the sensitivity of household fuel supplies amid global uncertainty.