US-Iran war: Oil prices declined on Wednesday, 13 May, after surging 8% over the previous three sessions, as investors closely monitored developments surrounding the fragile ceasefire in the Iran conflict and awaited the high-stakes meeting between US President Donald Trump and Chinese President Xi Jinping in China.
futures slipped 82 cents, or 0.76%, to $106.95 a barrel, while US West Texas Intermediate crude futures dropped 66 cents, or 0.65%, to $101.52 a barrel.
Back home, crude oil prices on (MCX) also witnessed a similar downward movement. MCX crude oil prices fell 0.77% to ₹9,655 per barrel.
What’s driving crude oil prices?
US President Donald Trump said on Tuesday that he does not believe he will require Xi Jinping’s support to bring an end to the Iran conflict, even as prospects for a durable peace agreement continued to fade. Tehran tightened control over the strategic strait, according to a Reuters report.
China remains the largest purchaser of Iranian oil despite pressure from the Trump administration. Trump is scheduled to meet Xi in Beijing on Thursday and Friday.
Even with those assurances, the conflict is expected to intensify domestic pressure on Trump, particularly after fresh US economic data released on Tuesday highlighted how the war is fuelling inflationary concerns.
The report further revealed that the Iran conflict has begun weighing on the US economy, the world’s largest, as rising crude oil prices push fuel costs higher. Economists also anticipate broader secondary effects in the coming months.
In April, US consumer prices climbed sharply for the second consecutive month, leading to the steepest annual rise in inflation in nearly three years. The data reinforced expectations that the Federal Reserve may keep interest rates unchanged for an extended period.
What’s the near-term outlook?
According to Kaynat Chainwala, AVP – Commodity Research, Kotak Securities, is likely to trade within a broad $80–$115 range, with any credible diplomatic breakthrough or deterioration capable of triggering sharp moves in either direction, until a durable framework emerges.
“The Strait of Hormuz remains effectively closed, with limited tanker resumptions from Gulf producers doing little to offset the broader disruption. Saudi Aramco CEO Amin Nasser has warned the market is losing roughly 100 million barrels of supply per week, echoing the International Energy Agency’s warning that this could become the largest oil supply shock on record, and that normalisation could slip into next year,” Chainwala added.
On the technical outlook, Ponmudi R, CEO of Enrich Money, believes that MCX Crude Oil is trading in the ₹9,400-9,500 zone, attempting to stabilise with the ascending trendline continuing to provide underlying support.
“Immediate resistance stands at ₹9,600– ₹9,800; a sustained move above this band could revive bullish momentum toward ₹9,900-10,100. On the downside, ₹9,200- ₹9150 acts as immediate support, with ₹8,900- ₹8,800 as a stronger base should selling pressure intensify. The near-term bias remains cautiously bullish, with direction contingent on ongoing supply disruption developments in the Strait of Hormuz,” Ponmudi added.
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