Oil Falls Despite US-Iran War Fears: What’s Driving Prices Lower Now?

Crude oil prices declined up to 2 per cent on Tuesday, even as tensions in West Asia intensified and the conflict entered its third month.

The dip follows a sharp rally in the previous session, with markets weighing profit booking against ongoing supply risks linked to the Strait of Hormuz.

Source : Pexel

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Key points generated by AI, verified by newsroom

• Global crude oil prices decreased despite ongoing West Asia conflict.
• Benchmarks Brent and WTI retreated after recent price surges.
• Domestic futures mirrored global decline, tracking international trends.

Global crude oil prices moved lower on Tuesday, even as the West Asia conflict entered its third month, highlighting the complex push and pull shaping energy markets.

While geopolitical tensions would typically push prices higher, traders appeared to book profits after a recent rally, leading to a pullback in crude benchmarks.

Global Benchmarks Retreat After Recent Surge

The international oil benchmark Brent crude declined 1.36 per cent to $112.88 per barrel, while US West Texas Intermediate (WTI) dropped 2.34 per cent to $103.92 per barrel.

This decline comes after Brent prices surged close to $114 per barrel in the previous session, reflecting heightened tensions in the Gulf region, reported IANS.

Domestic Futures Mirror Global Trend

Back home, crude oil futures for June 18 delivery on the Multi Commodity Exchange (MCX) also slipped. Prices were down 1.12 per cent, or Rs 109, to trade at Rs 9,578.

The fall in domestic prices tracked the global trend, even as underlying risks remained elevated.

Why Prices Fell Despite Escalation

At first glance, the drop in oil prices may seem counterintuitive, given the intensifying conflict between the US and Iran.

However, analysts suggest that the easing reflects a pause after a sharp rally, rather than a shift in the broader trend. The market appears to be balancing short-term profit booking against long-term supply concerns.

Reports indicate that Iran has launched attacks in the Gulf in response to US actions, escalating tensions and raising concerns over the stability of oil flows.

Renewed Hostilities Add to Uncertainty

Both sides have reportedly carried out strikes in the region, turning the Strait into a major flashpoint and fuelling fears that the fragile ceasefire could break down.

The latest round of missile and drone attacks followed moves by US President Donald Trump to escort stranded tankers and cargo ships through the Strait, which has remained largely blocked since the conflict intensified earlier this year.

Rupee Under Pressure Amid Oil Volatility

The impact of rising energy risks was also visible in currency markets.

The Indian rupee opened 22 paise weaker, trading at 95.31 against the US dollar after closing at a record low of 95.09 in the previous session.

What Experts Are Saying

Market participants believe that renewed tensions in the Hormuz region, along with Brent crude hovering around $113 per barrel, continue to pose headwinds for broader financial markets.

Oil markets remain caught between geopolitical risks and market dynamics.

While prices have corrected in the short term, the underlying risks tied to the West Asia conflict and supply disruptions remain firmly in place, suggesting continued volatility in the days ahead.