Crude oil futures slip on US, Iran ceasefire uncertainty

Crude oil prices fell marginally to Rs 8,697 per barrel in futures trade on Tuesday, tracking losses in global benchmarks even as investors remained cautious over the fluid geopolitical situation involving the US and Iran.

On the Multi Commodity Exchange (MCX), the most-traded June contract slipped by Rs 39, or 0.45 per cent, to Rs 8,697 per barrel in a business turnover of 9,045 lots. The July contract also weakened, falling Rs 70, or 0.82 per cent, to Rs 8,466 per barrel in 2,512 lots.

Analysts said market sentiment was weighed down by uncertainty after diplomatic efforts aimed at resolving the crisis faced repeated hurdles, raising concerns over the outlook for global oil demand and supply.

Meanwhile, US President Donald Trump on Monday indicated that Israel and Hezbollah had agreed to halt hostilities, raising hopes that a broader regional conflict could be avoided.

Trump in a social media post said that he spoke to Israel’s Prime Minister, Benjamin Netanyahu, and representatives of Hezbollah and both agreed that “all shooting will stop”. However, market participants remained wary as attacks from both sides were reported after the announcement, while Israeli and Hezbollah officials cast doubt on the durability of the arrangement.

“This has become a common pattern in recent months, and there are still plenty of mixed messages. President Trump says that negotiations are continuing. As a result, oil prices continue to be whipsawed by quickly changing headlines,” Warren Patterson, Head of Commodities Strategy at ING Think, said.

Globally, Brent oil futures for the August contract fell 1 per cent at $94.03 per barrel, while West Texas Intermediate for July delivery slipped 1.10 per cent to $91.15 per barrel.

According to analysts, the pullback followed a volatile start to the week, when oil prices in the international markets surged as much as 7 per cent amid reports that Tehran had suspended indirect negotiations with Washington and renewed concerns over the security of the Strait of Hormuz.