Oil prices have slid as indirect US-Iran talks show progress, with Brent crude trading near $71 a barrel. The retreat has eased inflation worries and lifted Indian equities and the rupee.
Crude oil has dropped around 40% since the United States and Iran decided to end hostilities, though uncertainty still hangs over control of the Strait of Hormuz. The strait is a key energy shipping route, and much of the latest diplomacy has centred on it.
What is pushing oil lower
Brent crude was trading near $71 a barrel after Qatar said indirect talks between the United States and Iran had progressed positively.
That progress in oil diplomacy has kept hopes of a broader resolution alive, with much of the discussion centred on the Strait of Hormuz.
Markets and the rupee react
Falling energy costs rippled quickly into Indian markets. The BSE Sensex climbed 377.40 points to 77,269.54 in early trade, while the NSE Nifty rose 106.70 points to 24,113.25.
Brent, the global benchmark, traded 1% lower at $70.79 a barrel as the rally built. Analysts noted that cheaper crude supports India’s economy by holding down inflation while leaving room for growth.
The rupee also drew support from the softer oil price. It opened 32 paise higher at 94.93 against the dollar, reclaiming the 94 level after closing the previous session at 95.25.
What traders are watching
Currency traders remain cautious despite the relief. A rising dollar and higher treasury yields still weigh on the rupee, and investors are awaiting US payrolls data for fresh direction.
The path of oil now hinges on whether the diplomatic progress holds and who controls the Strait of Hormuz.
Sources: Moneycontrol, Rediff
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