The Iran-US ceasefire is not just a break in a war, but also plays a key factor in the reopening of the global oil route The Strait of Hormuz. The ceasefire has helped the global oil markets to reduce their prices and put less burden on the consumers. India also imports a lot of oil which passes through the route.
While this change could eventually make prices cheaper for people in India, the relief will take some time to happen.
Falling Of The Oil Prices After Ceasefire
The reopening of the Strait of Hormuz has quickly slashed down the crude oil prices. After the Iran-US ceasefire, Brent crude prices dropped by about 13% to 14%, falling below $100 per barrel and reversing the high prices seen during the war, as reported by Reuters.
During the conflict, due to the closing of The Strait of Hormuz, caused a major fuel crisis, creating panic in buying oil and prices changing wildly. Now, the opening of the strait has lessened the panic and the oil market conditions are expected to be under control soon.
How It Reduces India’s Burden?
As 20% of the global oil passes through the Strait of Hormuz, hence India remains in a very tough spot. As a larger share of India’s crude oil imports passes through the Strait Of Hormuz, makes India a larger buyer of Gulf Oil.
Amid the closure of the Strait of Hormuz, India witnessed fuel shortages, increased oil prices and increased LPG prices. The government even had to reduce the taxes to reduce the burden. Hence reopening of the passage has reduced the supply risks.
What Are The Oil Prices In Major Cities Of India Today?
How Is The Relief Limited?
Despite the opening of The Strait Of Hormuz, the risk is still alive.
The oil supply won’t return to normal immediately. This is because shipping companies are still being careful about sending their tankers back into the area, and the costs for insurance and transport are still very high, as reported by Axios.
There is still uncertainty in the oil prices as the tensions still persist. The prices are expected to stabilize but are not going to fall completely.
