September Brent crude oil futures on the Intercontinental Exchange (ICE) traded at $88.53 per barrel, down 0.77% from the previous close, while September West Texas Intermediate (WTI) on the New York Mercantile Exchange (NYMEX) was at $82.17, down 0.38%, according to The Hindu BusinessLine. The decline came amid reports that mediators have proposed a 10-day ceasefire between the US and Iran to de-escalate tensions in West Asia.
Price Action and Ceasefire Hopes
On the Multi Commodity Exchange (MCX), August crude oil futures were at ₹7,943, down 0.08% from the previous close of ₹7,949, and September futures traded at ₹7,822, down 0.22% from ₹7,839. According to Warren Patterson, Head of Commodities Strategy at ING Think, and Ewa Manthey, Commodities Strategist, oil prices closed higher on Monday but retreated from session peaks, leaving Brent back below $90 a barrel. They noted that there is "some hope of de-escalation between the US and Iran" with mediators proposing a 10-day ceasefire, which could put a memorandum of understanding back on track, but "large divisions remain" between the two nations.
| Contract | Price | Change |
|---|---|---|
| September Brent (ICE) | $88.53/barrel | -0.77% |
| September WTI (NYMEX) | $82.17/barrel | -0.38% |
| August Crude (MCX) | ₹7,943 | -0.08% |
| September Crude (MCX) | ₹7,822 | -0.22% |
Supply Risks from Houthi Blockade
Meanwhile, the Houthis in Yemen announced a naval blockade on Saudi Arabia, putting oil supply at increased risk, the report said. Since disruptions hit the Persian Gulf, the Saudis have increased exports from Yanbu in the Red Sea, shipping around 4.6 million barrels per day of crude in June, up from about 1.3 million barrels per day at the start of the year. An effective blockade would prevent oil flows to Asia moving south via the Bab el-Mandeb Strait, forcing vessels to take a longer route through the Suez Canal and around Africa. Patterson and Manthey commented that "it’s yet to be seen how effective any blockade will be," but it will increase insurance costs and likely make voyage times longer and more expensive. They added that "the market is not convinced that this blockade will be successful" based on oil price action.
US Military Strikes and Market Response
According to a statement by US Central Command, the US completed another round of strikes against Iran at 9 pm ET on July 20. US forces struck Iranian military command centres, maritime capabilities, missile and drone launch sites, and air defence systems to degrade Iran’s ability to continue attacking commercial vessels flowing through the Strait of Hormuz. US Central Command said commercial vessel transits through the Strait of Hormuz continue, and since early May, Central Command forces have helped facilitate the transit of approximately 900 commercial vessels and 450 million barrels of crude oil. In a post on Truth Social, US President Donald Trump stated: "Every time Iran kills an American Soldier, they will pay for that killing many times over!"
Other Commodities Update
On the MCX, July menthaoil futures traded at ₹1,321, up 1.26% from the previous close of ₹1,304.50. On the National Commodities and Derivatives Exchange (NCDEX), August guargum contracts were at ₹11,822, down 1.21% from ₹11,967, and August castorseed futures were at ₹7,144, down 0.65% from ₹7,191, according to The Hindu BusinessLine.
Implications for Traders
For crude oil traders and procurement teams, the combination of a potential ceasefire and a Houthi blockade creates opposing forces. While diplomatic progress could ease supply fears, the blockade threat and ongoing US strikes keep the risk premium elevated. The market's current reluctance to price in a successful blockade suggests that any supply disruption that materializes could trigger sharp price rallies. Key data releases to watch include weekly US Energy Information Administration inventory reports and any further confirmation of the ceasefire talks.
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