Crude oil cheaper in the global market

Summary: The downward trend in crude oil prices in the global market continues. Brent and US crude oil WTI prices have reached near two-month lows. Hopes of a reduction in tensions between the US and Iran and improved expectations regarding global supply have increased pressure on oil prices.

Karachi: Crude oil prices recorded a further decline in the global market on Tuesday, as a result of which major global benchmarks reached near two-month lows.

According to the latest market data, the price of Brent crude oil fell by $1.93 to $90.64 per barrel, while the price of US West Texas Intermediate (WTI) was recorded at $85.41 per barrel.

One major reason for the decline in oil prices is the reduction in concerns about further escalation of tensions in the Middle East. Statements by US officials and signals of avoiding further major military action against Iran have reduced concerns about potential supply disruptions in the global market.

US Secretary of State Marco Rubio also told G7 foreign ministers that economic sanctions against Iran and a naval blockade of the Strait of Hormuz were proving effective.

However, the situation in the region has not fully returned to normal. There are still concerns about naval activity in the Strait of Hormuz and attacks on tankers. This vital sea route carried about 20 percent of the world’s oil supply before the war.

On the other hand, the progress of possible peace talks between Russia and Ukraine is also affecting the global oil market. A possible agreement between the two countries could increase Russian oil exports, which would create opportunities for improving global supplies.

Higher-than-expected inflation figures in the United States also caught the attention of investors. The possibility of further interest rate hikes could affect global economic activity and future oil demand.

The continued decline in global crude oil prices may provide some relief to countries like Pakistan that rely on imported fuel. However, the prices of local petroleum products are determined by taking into account the value of the rupee against the dollar, import costs, government taxes and other factors, in addition to global prices.