Oil Crashed to $73 but Little
Important on Petro Product Price in India
1.
Oil prices fall to near pre-war levels
o
Global oil prices declined on 25 June 2026,
approaching levels seen before the Iran conflict began in February.
2.
Brent crude drops sharply
o
Brent crude, the global benchmark, fell about 1% to
around $73 per barrel.
o
During trading, it briefly dipped below $72.48,
the closing price before the first U.S.-Israeli strikes on Iran.
3.
US crude also weakens
o
West Texas Intermediate (WTI) crude fell about 0.5%
to around $70 per barrel.
o
Before the war, WTI traded at just above $67 per
barrel.
4.
Reopening of the Strait of Hormuz boosts confidence
o
The decline follows a preliminary agreement between
the United States and Iran that enabled the reopening of the Strait of
Hormuz.
5.
Shipping bottlenecks are easing
o
Progress in clearing vessels stranded in the
Persian Gulf has reduced fears of prolonged supply disruptions.
6.
Markets reassess geopolitical risk
o
As immediate threats to oil exports diminish,
traders are lowering the geopolitical risk premium embedded in oil prices.
Global
Equity Markets Rally
7.
US stock futures advance
o
Futures linked to the S&P 500 pointed to
gains of nearly 1%.
8.
AI optimism lifts technology stocks
o
Strong earnings from Micron Technology renewed
investor enthusiasm for artificial intelligence-related companies.
9.
Asian markets post strong gains
o
South Korea’s KOSPI surged more than 5%.
o
Japan’s Nikkei 225 rose 4.6%.
o
Taiwanese equities also moved higher.
10.
European stocks gain
o
The STOXX Europe 600 climbed about 0.5%.
Fuel
Prices Begin to Ease
11.
US gasoline prices edge lower
o
Average gasoline prices fell slightly to $3.92
per gallon.
o
However, prices remain over 30% higher than
before the conflict.
12.
Diesel prices decline modestly
o
Average diesel prices fell by two cents to $4.96
per gallon.
o
Diesel remains roughly 32% above pre-war
levels.
13.
Retail fuel prices lag crude movements
o
Changes in gasoline and diesel prices typically
follow shifts in crude oil prices with a time lag.
Impact on
Shipping and Freight Costs
14.
Shipping remains costly
o
Despite improvements, transit through the Strait of
Hormuz remains more expensive due to lingering security concerns, including
potential sea mines and elevated insurance premiums.
15.
Lower energy costs may reduce freight rates
o
Falling oil prices are expected to gradually reduce
shipping costs because fuel is a vessel’s largest operating expense.
16.
Tanker rates correcting faster
o
Tanker freight rates, which spiked sharply during
the conflict, have already moderated significantly.
17.
Container shipping may take longer to normalize
o
Container freight rates increased later in the
conflict and may remain elevated for a longer period before returning to
pre-war levels.
Key
Implications
For
Global Economy
·
Reduced risk of an energy-driven recession.
·
Lower inflationary pressure from energy costs.
·
Improved investor sentiment and stronger equity
markets.
For
Energy Importers such as India
·
Lower crude prices can reduce import bills.
·
Helps contain fuel inflation and fiscal pressures.
·
Supports economic growth through lower energy
costs.
For
Global Shipping
·
Freight costs are likely to decline gradually.
·
Risk premiums and insurance costs may remain
elevated until regional security stabilizes.
Key
Takeaway
The reopening of the Strait of Hormuz and the
normalization of shipping activity have significantly eased fears of a global
energy shock. While oil and freight markets have not fully returned to pre-war
conditions, the decline in crude prices signals growing confidence that major
supply disruptions can be avoided, benefiting both the global economy and
energy-importing countries like India.
Oil
prices fell on Thursday (25.06.2026), testing levels not seen since the war in
Iran started in February.
After
surging over the past four months, oil prices have retreated sharply since the
United States and Iran reached a preliminary agreement this month to reopen the
Strait of Hormuz, a critical trading route for oil and gas exports from the
Middle East.
The
slide in oil prices has gathered pace as efforts to clear a backlog of ships
trapped in the Persian Gulf have advanced, easing concerns about supply
disruptions.
On
Thursday, the price of Brent crude, the global benchmark for oil, fell about 1
percent to about $73 a barrel. In an otherwise quiet trading session, prices at
one point hovered just below $72.48 a barrel, the daily settlement price on the
eve of the first U.S.-Israeli strikes on Iran.
West
Texas Intermediate crude, the U.S. benchmark, fell about half a percent to
around $70 a barrel. This grade of crude was just over $67 per barrel on the
day before the start of the war.
Tech stocks surge.
·
Futures
on the S&P 500 pointed to a rise of nearly 1 percent when stocks resume
trading in the United States on Thursday. Strong earnings from the U.S.
chipmaker Micron Technology, released after the market closed on Wednesday,
appeared to reignite enthusiasm for artificial intelligence-related companies.
·
Stocks
in Asia rallied. In South Korea, the benchmark Kospi gained over 5 percent,
while Japan’s Nikkei 225 moved 4.6 percent higher. Shares in Taiwan rose 0.5
percent.
·
In
Europe, the Stoxx 600, a broad-index that tracks the region’s largest
companies, rose about 0.5 percent.
Gasoline prices slip.
·
U.S.
gas prices fell slightly on Thursday, to a national average of $3.92 a gallon,
according to the AAA motor club. Gasoline prices are still up more than 30
percent since the start of the war.
·
Gas
prices don’t move in lock step with crude, usually trailing increases or drops
by a few days.
·
The
average price of diesel fell two cents to $4.96 on Thursday, up 32 percent
since the start of the war.
What they are saying:
Freight rates will fall ‘in time.’
·
In
a report on supply-chain stress stemming from the turmoil in shipping in the
Persian Gulf, Grace Zwemmer of Oxford Economics noted
that transit through the Strait of Hormuz “remains more costly and riskier than
before the war due to the potential presence of sea mines and elevated risk
premiums.”
·
The
drop in energy prices “will bring down freight rates in time,” she added,
because fuel is typically the largest operating expense for vessels. But not
all freight rates will respond the same way: Tanker rates rose the fastest and
have subsequently moderated significantly, while rates for container ships only
started to edge up more recently and could take longer to return near prewar
prices.