New Delhi: Crude prices retreated sharply on Monday, with domestic futures falling more than 6 percent to Rs 7,601 per barrel as signs of easing tensions in West Asia eroded the risk premium in global oil benchmarks.
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On the Multi Commodity Exchange (MCX), crude oil futures for August delivery slumped Rs 512, or 6.31 per cent, to Rs 7,601 per barrel. The contract hit its lower circuit level in the intra-day trade.
Similarly, the September contract also fell sharply by Rs 415, or 5.3 percent, to Rs 7,424 per barrel amid broad-based selling by investors.
Traders said the sharp correction mirrored weakness in overseas markets, where market participants pared risk positions amid expectations that diplomatic efforts between the US and Iran could avert a prolonged disruption of oil supplies through the Strait of Hormuz.
The selloff tracked a sharp decline in international crude oil prices.
Brent oil futures for October delivery dived by USD 6.38, or 7.3 percent, to USD 81.55 per barrel on the Intercontinental Exchange.
Additionally, US benchmark West Texas Intermediate (WTI) also slipped below the USD 80 per barrel mark, with futures on the New York Mercantile Exchange falling USD 5.89, or nearly 7 percent, to USD 78.78 per barrel.
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Analysts said investors rushed to unwind long positions as the signs of an easing geopolitical backdrop outweighed concerns over global crude supplies, though developments in the region continue to warrant caution.
US President Donald Trump said negotiations with Iran would be held on Monday but did not specify a timeline for an agreement after indicating he had called off an imminent strike in the hope of resolving differences over Tehran's nuclear programme and reopening the Strait of Hormuz.
According to reports, shipping traffic through the Hormuz slowed after attacks on commercial vessels. However, two Saudi oil tankers crossed the Bab el-Mandeb Strait over the weekend despite threats from Yemen's Houthis, easing immediate fears of supply disruptions.
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