Crude Oil Prices Remain Stable Amid US-Iran Peace Deal Talks

Oil Prices Steady Amid US-Iran Conflict Tensions

Oil prices steadied in early trading on Thursday, 7 May, as investors assessed the likelihood of a successful peace agreement between the US and Iran. The price recovery came after a steep decline in the previous session, with both benchmark contracts, Brent crude and US West Texas Intermediate (WTI) crude, tumbling over 7% on Wednesday.

Brent crude futures rose 88 cents, or 0.9%, to $102.15 per barrel by 0032 GMT, while US WTI crude advanced $1.12, or 1.2%, to $96.20 a barrel. The Multi Commodity Exchange (MCX) crude oil prices also witnessed a similar upward movement, tracking global prices, and rose to ₹9,040 per barrel.

The US-Iran conflict has been a major driver of oil price volatility in recent weeks. US President Donald Trump said it was "too early" for direct talks with Iran, while a senior Iranian lawmaker described the US proposal as more of a "wish list" than a practical solution. Iran stated that it was examining a US-backed peace proposal, which aims to formally end the conflict but leaves unresolved Washington's key demands, including Tehran halting its nuclear program and reopening the Strait of Hormuz.

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The price recovery is also driven by concerns over rising fuel prices in the US, which have intensified concerns among voters over the cost of living. Trump is facing mounting pressure to end the conflict, and his meeting with Chinese President Xi Jinping in Beijing on May 14-15 may also influence oil prices. China's top diplomat has urged the quick reopening of the Strait of Hormuz during discussions with his Iranian counterpart.

According to Norbert Rücker, Head of Economics and Next Generation Research at Julius Baer, the oil market has moved past the initial shock reaction and has settled in a regime of deficit absorption by inventory draws. There is breathing room to deal with the supply shock beyond summer.

Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, expects Brent to remain locked in a headline-driven $100-$118 range, well below the March peak of $126 but with the structural risk premium firmly intact. Ponmudi R, CEO of Enrich Money, said that a sustained move above ₹9,650-₹9,700 could reverse the near-term bearish momentum and push prices toward ₹9,800-₹9,900.

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