Oil prices fell on Thursday to their lowest since before the start of the Iran war at the end of February as an interim deal to end fighting, reopen the Strait of Hormuz and ease sanctions on Tehran boosted the global supply outlook.
Brent crude futures were down $1.85, or 2.33%, at $77.69 a barrel at 11:15 a.m. CDT (1615 GMT), while U.S. West Texas Intermediate fell $1.89, or 2.46%, to $74.90 a barrel.
Brent touched its lowest level since February 27, which was the last day of trading before the initial U.S.-Israeli strikes on Iran, while WTI was at its lowest since March 4.
“The potential reopening of the Strait of Hormuz removes the big risk premium that had been baked into crude from (the) disrupted 20% of global oil flows,” said Phil Flynn, senior analyst with the Price Futures Group in a morning note.
“While some say full normalization may take weeks – insurance, repairs, sanctions relief – but the direction is clear, and as we have found out that the more pessimistic timeline (has) been proven to be too pessimistic,” Flynn said.
The 14-point memorandum of understanding between the United States and Iran begins a 60-day negotiation period during which Iran will allow toll-free passage through the Strait of Hormuz. The deal calls for traffic through the strait to be restored to its full capacity within 30 days.
The preliminary accord defers many of the more difficult issues, such as Iran’s nuclear program, and also requires the United States and its partners to come up with a $300-billion plan to finance Iran’s recovery.
Analysts expect a gradual recovery in flows through the Strait of Hormuz, while industry experts have cautioned that prices may not plummet as demand recovers and inventories are refilled.
Investment bank Goldman Sachs expects Gulf exports to normalize to pre-war levels by end-July, with crude production recovering by October.
The bank estimates that a normalization in exports to pre-war levels might be achieved with a 13 million barrel-per-day increase in Hormuz flows from current levels to around 70% of pre-war levels.
BNP Paribas does not currently anticipate a return to pre-war prices and views $75 per barrel as a “durable floor for the foreseeable future,” it said in a note, given ongoing supply losses and higher demand. Brent traded around $60 to $70 per barrel in the first two months of the year before the war.
China, the world’s second-largest oil consumer, is forecast to consume 753 million metric tons in 2026, down 4.9% from 2025 amid a pivot to new energy and high oil prices, according to a report published by PetroChina’s research unit.
Ukrainian drones hit the Russian capital’s oil refinery for the second time this week in what Ukraine cast as a demonstration of its growing capabilities.
Mkts extend gains amid Fed pause
Domestic equities extended ??gains on Thursday, as a boost from lower oil prices after the US-Iran peace deal overpowered weakness in information technology stocks following the ??Federal Reserve’s rate pause and signal of a potential hike later this year.
The Nifty 50 rose 0.34 per cent to 24,168, while the BSE Sensex added 0.33 per cent to 77,409.98, gaining 4.3 per cent and 4.8 per cent, respectively, in five sessions on softer crude prices.
Markets stayed muted for much of the session before a final-hour climb, which two traders attributed to likely foreign buying.
Brent crude fell 2.1 per cent to $77.8 a barrel on the day.
Thirteen of the 16 major sectors advanced. The broader smallcaps and midcaps rose 0.4 per cent each. “The drop in crude has been the single biggest relief factor for Indian markets this week, easing concerns over earnings and the broader economy,” said Kranti Bathini, director of equity strategy at Wealthmills Securities.
“With a weak monsoon posing an upside risk to inflation, sustained softness in oil could anchor sentiment, even as a hawkish Fed tempered gains in today’s session after the recent rally.”
IT stocks fell 1.2 per cent as the Fed’s commentary lifted expectations of a ??September rate hike.
Higher US rates can sap foreign appetite for emerging markets such as India and curb spending in key overseas markets.
That is particularly relevant for Indian IT firms, which derive a large share of revenue from the United States and are highly sensitive to shifts in US client budgets.
Gold slips as hawkish Fed signals lift dollar
Gold edged lower on Thursday, pressured by hawkish policy signals from the Federal Reserve and a stronger dollar, while the US-Iran ceasefire deal that dialled back inflation concerns and sent oil markets lower put a floor under prices.
Spot gold was down 0.2 per cent at $4,249.16 per ounce at 1307 GMT.
Prices touched their lowest since November 2025 last week. US gold futures fell 2.6 per cent to $4,268.40.
“The most significant thing was the hawkish tilt by the Fed yesterday. That has the dollar at new highs for the year, which is keeping gold under some pressure,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
The Fed held interest rates steady on Wednesday, but nine out of 19 policymakers see a need for a hike later in the year.
