Global oil prices traded higher on Tuesday morning as supply worries persisted amid a fragile US-Iran ceasefire and concerns of renewed hostilities in West Asia.
US president Donald Trump on Monday told reporters that the ceasefire is on “massive life support” and is “unbelievably weak”. Following his comments, Iranian parliamentary speaker Mohammad Ghalibaf said Iran’s armed forces were ready to respond to any aggression.
In a tweet in Persian on Monday evening, Ghalibaf said:
“Our armed forces are ready to deliver a harsh and instructive response to any aggression; misguided strategies and erroneous decisions will always yield erroneous outcomes, and the entire world has already grasped this truth. We are prepared for all options; they shall be taken aback.”
Price check
At 6:55 AM, the July contract of Brent on the Intercontinental Exchange was at $104.82, higher by 0.44% from its previous close, while the June contract of West Texas Intermediate on the New York Mercantile Exchange rose 0.60% to $98.66 a barrel.
However, gains were capped after the US government decided to release around 53 million barrels of crude from its strategic .
The Trump administration on Monday announced it would loan energy companies 53.3 million barrels of crude from the US Strategic Petroleum Reserve as part of a global agreement to calm oil markets.
A prolonged conflict and any blockade of the could further squeeze global oil supplies, as the strait handles roughly one-fifth of international oil trade.
India impact
India has been significantly impacted by the war as it imports nearly 90% of its oil requirement.
Prime Minister Narendra Modi has already appealed to citizens to use more public transport, work from home and rationalize petrol and diesel consumption to conserve foreign exchange, given India’s status as a net crude importer.
India currently has , 60 days of natural gas and 45 days of LPG rolling stock, according to an official statement released on Monday after a meeting of the informal group of ministers (IGoM) on the West Asia crisis.
With retail prices of petrol, diesel and LPG largely unchanged despite elevated crude prices, oil marketing companies (OMCs) are facing mounting revenue losses.
In a tweet on Sunday, petroleum minister Hardeep Singh Puri said OMCs were incurring losses of up to ₹1,000 crore per day.
“Even after this decision, estimated OMC under-recoveries during this quarter itself are expected to surge to ₹2,00,000 crore and losses are expected to be around ₹1,00,000 crore,” he tweeted.