The oil prices have tumbled sharply after Iran announced that the Strait of Hormuz would remain “completely open” to commercial shipping for the duration of the ceasefire. The announcement has eased the fears of a prolonged global supply disruption.
Brent crude slipped belowthe $90 mark to around $88 a barrel, down from above $98 earlier as markets swiftly priced in the return of smoother oil flows through one of the world’s most critical energy chokepoints.
"The passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire," said Iranian Foreign Minister Abbas Araghchi.
After the announcement, the global markets rallied on the announcement. S&P 500 index of the biggest firms listed in the US closed up 1.2%. The Cac index in Paris and Dax in Frankfurt both ended the day around 2% up while London's FTSE 100 closed 0.7% up.
A 10-day ceasefire has been announced by the US President Donald Trump and agreed on by Lebanon and Israel started at midnight local time. Trump said he remains optimistic about the Iran war, describing it as “going along swimmingly” and suggesting it could end soon.
Indian economy has remained safeguarded amid the rising crude oil prices. The crash in the crude oil prices will leave a cushioning impact in the economy.
Since India being a major energy-importing nation relying on imports for 89% of its crude requirements, the restoration of traffic through the Strait ensures the steady flow of Middle Eastern crude, easing the pressure on inflation-hit economies across Asia and Europe.
India's robust macroeconomic and financial sector fundamentals are likely to cushion the impact of a sustained oil price shock, said S&P Global Ratings.
Indian markets are likely to see a positive opening on Monday after GIFT Nifty surged more than 300 points late Friday, tracking a steep decline in global crude oil prices
Vinod Nair, Head of Research, Geojit Investments Limited on the market projections said, "Looking ahead, near-term direction hinges on Middle East peace progress, crude stability below $100, and foreign flow trajectory. Sustained de-escalation could ease inflation and currency pressures, improving risk appetite for import-sensitive markets like India. Q4 earnings and FY27 management guidance will shape sectoral leadership. Sentiment is constructive but markets will remain selective amid lingering global uncertainties."
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