Oil Down 2% as US Signals Potential Easing of Iranian Sanctions| Stock Market Today

International oil prices slipped over 2% on Friday, easing some of the recent pressure on global markets. The decline comes after the United States hinted at possible relaxation of sanctions on Iranian oil already loaded on vessels, while global powers backed measures to secure shipping through the Strait of Hormuz.

This combination of signals marks early efforts to stabilize oil supply, following weeks of volatility triggered by tensions in West Asia.

Market Performance

• Brent Crude (April contract, ICE): $105.88 per barrel, down 2.44%
• WTI Crude (April contract, NYMEX): $93.20 per barrel, down 2.46%

Oil prices have been on a rollercoaster since the outbreak of conflict on 28 February. Brent crude briefly touched $119 per barrel on Thursday, highlighting how geopolitical developments continue to sway markets.

Sanctions Signal from the US

The US has suggested it may ease restrictions on Iranian oil that is already at sea, signaling a potential relief for supply-constrained markets.

• Estimated Iranian oil currently on the water: 140 million barrels
• The US has already allowed Iranian oil to continue flowing out of the Gulf.
• Previous sanction waivers for Russian crude have been extended for a month, effective 12 March, with India specifically receiving a waiver on 5 March.

US Treasury officials emphasized that these moves do not target Iran’s energy infrastructure. Additional steps, such as releasing oil from the Strategic Petroleum Reserve (SPR), remain possible to further stabilize prices.

Global Efforts to Secure Shipping

Several major economies have come together to push for safe passage through the Strait of Hormuz, a critical chokepoint for nearly 20% of global oil and gas supplies.

• Countries involved: Britain, France, Germany, Italy, the Netherlands, Japan
• Key statement points:
  • Immediate moratorium on attacks on civilian infrastructure, including oil and gas facilities
  • Commitment to contribute to efforts ensuring safe maritime routes
  • Coordination with oil producers to boost output and stabilize markets

These moves reflect the international community’s focus on reducing disruption risks and easing price pressures worldwide.

Impact on India

India, heavily reliant on imports for its energy needs, is feeling the effects of this volatility.

• India imports nearly 90% of its crude oil requirements.
• Indian basket of crude:
  • $146.39 per barrel on 18 March
  • Monthly average for March: $114.08 per barrel
  • February average: $69.01 per barrel
• Composition: 78.71% sour grade (Oman and Dubai average) and 21.29% sweet grade (Brent dated)

Even small fluctuations in crude prices have substantial effects: a $1 increase per barrel raises India’s annual import bill by roughly ₹16,000 crore. This adds pressure on inflation and the fiscal balance, while domestic LPG supply has also been impacted by disruptions in West Asia.

Key Takeaways

• Oil prices fell over 2% after US hints of easing sanctions on Iranian oil.
• Brent and WTI contracts fell to $105.88 and $93.20 per barrel, respectively.
• Global powers are working to ensure safe passage through the Strait of Hormuz.
• India’s high dependency on imports makes it vulnerable to price swings, affecting crude, refined products, and LPG availability.

Source: Livemint