Key facts
- Oil prices rebounded amid uncertainty over U.S.-Iran deal details.
- A preliminary U.S.-Iran agreement aims to reopen the Strait of Hormuz.
- U.S. average retail gasoline prices fell below $4 a gallon for the first time since mid-April.
- The U.S. emergency crude oil supply is at its lowest level since 1983.
- The U.S. Strategic Petroleum Reserve has fallen to 340.3 million barrels.
- The Trump administration plans to release 172 million barrels from the emergency reserve.
- Analysts warn elevated prices may persist through summer and fall due to depleted inventories.
- Grain and vegetable oil futures declined on expectations of improved crop input access.
- Indian aluminium stocks fell up to 6% as aluminium prices crashed.
- Gold and silver prices dipped as investors await details on the peace agreement.
- Morbi's ceramic industry resumed operations after a two-month shutdown.
- A record 45% of central banks plan to boost gold holdings in the next 12 months.
Oil prices have rebounded following an initial drop, driven by uncertainty over the specific details of a preliminary U.S.-Iran agreement intended to reopen the Strait of Hormuz. Analysts suggest that a full restoration of oil supply to the market could take several months. This development has cooled global oil prices, benefiting India's economy by reducing import costs and easing inflation risks. However, domestic concerns in India are rising due to early monsoon weakness and expected El Niño conditions.
In the United States, average retail gasoline prices have dipped below $4 a gallon for the first time since mid-April, a trend attributed to optimism surrounding the preliminary U.S.-Iran deal. Concurrently, the U.S. emergency crude oil supply has reached its lowest point since 1983, with the Strategic Petroleum Reserve falling to 340.3 million barrels. This drawdown is part of a larger plan by the Trump administration to release 172 million barrels from the emergency reserve to mitigate rising fuel prices.
Despite the potential for lower crude oil and LNG prices, analysts warn that elevated prices may persist through summer and fall. This is due to depleted inventories and the time required to ramp up production. Experts also caution that consumers should not expect immediate price drops for gasoline, groceries, and airline tickets, even after a tentative deal to end the Iran war. Supply chain disruptions and the slow integration of cheaper oil into refined products mean higher costs will likely linger.
Expectations of a reopened Strait of Hormuz have also influenced other markets. Grain and vegetable oil futures have declined on improved access to vital crop inputs, potentially alleviating food inflation fears. Indian aluminium stocks have fallen as aluminium prices crashed, following news that the deal could improve delivery prospects from Gulf producers. Gold and silver prices have dipped as investors await further details on the agreement, with volatility expected due to crude oil prices, dollar index movements, and Federal Reserve policy. U.S. spot petrochemical prices have also declined, though operational issues on the U.S. Gulf Coast have mitigated steeper drops. Singapore bunker sales, however, saw a year-on-year decline in May, impacted by the U.S.-Iran war and competition from other Asian ports.
The ceramic industry in Morbi has resumed operations after a two-month shutdown caused by the Iran war and subsequent fuel shortages. Production costs have surged by 80%, but the domestic market is compensating for halved exports, with units seeing an extra ₹1,000 crore monthly turnover. A record 45% of central banks plan to boost gold holdings within the next 12 months, signaling sustained demand for the precious metal.