Crude oil futures declined by more than 5 per cent on Monday morning after US President Donald Trump put a planned strike on Iran on hold to pave the way for peace talks, according to The Hindu BusinessLine. At 9.28 am, October Brent oil futures were at $83.49, down 5.05 per cent, and September crude oil futures on WTI (West Texas Intermediate) were at $79.70, down 5.85 per cent, the report stated.
Price action across exchanges
The sell-off was broad across global benchmarks and Indian futures. According to The Hindu BusinessLine, August crude oil futures on the Multi Commodity Exchange (MCX) were trading at ₹7,620 during the initial hour of trading on Monday against the previous close of ₹8,113, down 6.08 per cent. September futures on MCX were at ₹7,454 against the previous close of ₹7,839, down 4.91 per cent.
| Contract | Price | Change |
|---|---|---|
| October Brent | $83.49 | -5.05% |
| September WTI | $79.70 | -5.85% |
| August MCX crude | ₹7,620 | -6.08% |
| September MCX crude | ₹7,454 | -4.91% |
Trump pauses planned Iran strike
The trigger for the slide was a weekend post on Truth Social by President Trump, in which he said the US was "locked and loaded" against Iran but had agreed to cancel the attack after being asked by Iran and other Middle Eastern countries to hold off, according to The Hindu BusinessLine.
"The U.S.A. is locked and loaded and ready to go against the Islamic Republic of Iran, at levels of Military Terror, Strength, and Power not seen since World War II. Despite this, we have just been asked by Iran, and other Middle Eastern Countries, to hold off any attack in that the perimeters of a deal has been agreed to. This would include the Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran's nuclear threat. Based on this request, I have agreed, for the future benefit of the WORLD and, likewise, the survival of a successful and prosperous Iran, to cancel the attack, subject to being able to rapidly make a DEAL. The Country of Israel joins me in this commitment."
The peace-talk overture removed the immediate risk of a military confrontation in the Strait of Hormuz, a critical crude oil shipping chokepoint, the report indicated.
OPEC+ raises supply targets from September
Separately, the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, decided to increase production output by 188,000 barrels a day from September, The Hindu BusinessLine reported, citing an OPEC press statement.
- Seven participating countries decided to implement a production adjustment of 188,000 barrels per day from the additional voluntary adjustments announced in April 2023.
- The adjustment will be implemented in September 2026.
- The seven countries noted that this measure will provide an opportunity for the participating countries to accelerate their compensation.
- The countries confirmed their intention to fully compensate for any overproduced volume since January 2024.
The combination of a de-escalated geopolitical risk premium and an announced OPEC+ supply increase pressured futures across the curve, according to the source article.
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