US-Iran Conflict Eases, Oil Prices Decline 7%

Market Update

On Wednesday, March 25, oil prices plummeted nearly 7% as renewed diplomatic efforts by the US to end the conflict with Iran gained momentum. This development outweighed concerns over additional troop deployments and the continued disruption in the Strait of Hormuz.

Brent Crude Prices

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

• Brent crude prices dropped as much as 7% to around $97 per barrel
• West Texas Intermediate (WTI) hovered near $87

Domestic Market

• Crude oil prices on Multi Commodity Exchange (MCX) fell over 4% to ₹8,394 per barrel on Wednesday

Market Analysis

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

According to a report by Bloomberg, the US has shared a 15-point settlement proposal with Tehran, which includes a month-long ceasefire and provisions such as dismantling Iran's nuclear program and halting support for proxy groups. The proposal is seen as a positive development, which has eased fears of prolonged supply disruptions.

Key Support and Resistance Levels

• ₹8,600-₹8,800: key resistance zone on the domestic front
• ₹8,300 and ₹8,000: important support levels to watch

Market Outlook

Volatility is expected to remain elevated as headlines continue to influence sentiment. According to Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, the bias points towards a gradual downside drift as long as Brent sustains below $100 and WTI below $94.

Technical Analysis

• 100-EMA level on 4-hourly chart: key support level at ₹7,793
• Breakout of this mark will boost downside pressure in crude oil price
• Resistances: ₹8,699 - ₹9,335 respectively
• Daily chart paints a bearish picture with the RSI retreating toward 50.