Crude oil prices soar on Hormuz stalemate, US-Iran impasse continues

New Delhi: Global oil prices surged on Tuesday as the US and Iran remained at odds over ending the war and reopening the Strait of Hormuz, a key global energy chokepoint.

At the time of writing the copy, (around 6.00 PM), the June contract of Brent on the Intercontinental Exchange was trading 3.58% higher at $112.10, while the May contract of West Texas Intermediate on the Nymex rose 4.30% to $100.51 per barrel.

Iran has proposed reopening the Strait of Hormuz while deferring negotiations with the US on its nuclear programme. However, US President Donald Trump is reportedly “unhappy” with the proposal as it failed to address the issue of Iran's nuclear programme.

According to an Al Jazeera report, Iranian foreign minister Abbas Araghchi has discussed with regional interlocutors a proposal to reopen the Strait of Hormuz but defer talks with the US on Tehran’s nuclear programme until later, during his recent three-nation tour of Pakistan, Oman and Russia.

Discussions in Muscat focused on the Strait of Hormuz, regional security guarantees, and the framework for a potential settlement, with nuclear-related issues set aside for a later stage, the report said.

In a tweet on Monday, the Iranian foreign minister said: “Appreciative of my gracious hosts in Oman. Important discussions on bilateral matters and regional developments. As only Hormuz littoral states, our focus included ways to ensure safe transit that is to benefit of all dear neighbors and the world. Our neighbors are our priority.”

Meanwhile, a Reuters report citing a US official said Trump "doesn't love the proposal" from Iran as it fails to address nuclear programme.

Markets remain on edge over the Strait of Hormuz blockade, which handles nearly a fifth of global oil trade. Any prolonged disruption could tighten supplies, push up prices and strain major importers such as India.

Before the war, India sourced 60% of its oil imports, 50% of its liquefied natural gas imports and about 90% of its liquefied petroleum gas imports from West Asia through this strait.

As about 90% of India's oil requirement is imported, supply disruptions and price volatility pose a significant macroeconomic risk.

The Indian crude oil basket, representing a derived basket comprising sweet grade (Brent Dated) and sour grade (Oman & Dubai average) of crude oil imported by Indian refineries, stood at $109.86 per barrel as of 24 April.

UAE's Opec exit

The decision of the United Arab Emirates, the seventh largest oil producer in the world, to exit the Organization of Petroleum Exporting Countries (Opec) is also a major trigger for the global oil market. Its exit is seen as a move aimed at increasing its oil output, contrary to the Opec's strategy of curtailment to support prices.

UAE's state news agency Wam said that the decision "follows a comprehensive review of the UAE’s production policy and its current and future capacity and is based on our national interest and our commitment to contributing effectively to meeting the market’s pressing needs". The exit will come into effect 1 May.

India fuel prices

Amid rise in global oil prices and concerns over a likely fuel price hike after the end of the assembly elections in West Bengal on 29 April, Sujata Sharma, joint secretary in the ministry of petroleum and natural gas, on Tuesday told reporters that there was no proposal as of now to hike fuel prices.

"Petrol prices… I must say there is no proposal for an increase in prices. ATF (aviation turbine fuel) prices again, you know that there has been a staggered increase and whenever the decision is taken, we will inform you about that also,” Sharma said.

Prices of regular petrol and diesel have largely remained unchanged since March 2024. In the national capital, state-owned oil marketing firms are selling regular petrol at ₹94.77 a litre, while diesel is being sold at ₹87.67 a litre.