Crude oil becomes 15% cheaper falls below $95 mark:The black gold sees sharpest single-day fall in about 6 years

After the announcement of a 2-week ceasefire between the US and Iran, Brent Crude Oil has become 15% cheaper. The price of Brent Crude Oil on April 8 has fallen by about 15%, i.e., $15, to $94.27 per barrel. According to reports, this is the biggest single-day drop in oil prices in about 6 years. A day earlier, the price of Brent Crude Oil was at $109.27 per barrel. Before the war between America and Iran started on February 28, crude oil was around $70 per barrel. Then during the war, crude oil prices had risen to $120 per barrel. Ceasefire is the reason for decline in Crude Oil prices Global Markets Surge on Ceasefire News of the ceasefire has brought a surge in global stock markets. America’s SP 500 Futures rose 2% and European markets climbed up to 5%. India’s Sensex and Nifty are also witnessing a rise of around 4%. With increased investor confidence, the value of the dollar has declined, as people are now moving towards stocks instead of the dollar as a safe investment. However, gold prices have seen a slight increase with hopes of a ceasefire. Will Crude Oil Prices Fall Further? Analysts say that this relief may be temporary. According to IG analyst Tony Sycamore, this is a good start, but there are still many ifs and buts remaining. Experts fear that if a permanent agreement is not reached after two weeks, oil prices could cross $100 again. What benefits will India get from cheaper crude oil? Crude oil is most essential for India, because we purchase about 85% of our requirement from other countries. When its prices fall in the international market, the Indian economy gets relief on several fronts. 1. Reduction in petrol and diesel prices: When crude oil becomes cheaper, oil marketing companies (like IOC, BPCL, HPCL) can reduce petrol and diesel prices. This reduces transportation costs, which has a direct impact on your monthly budget. 2. Control on Inflation Rate: In India, inflation is directly connected to diesel prices. When diesel is cheaper, truck freight charges decrease. This makes the transportation of fruits, vegetables, grains and other daily commodities cheaper. This leads to a reduction in prices of food items in the market. 3. Improvement in Current Account Deficit: India pays a huge amount in dollars to purchase oil. If oil is cheaper, India’s import bill decreases. This saves India’s foreign exchange reserves and reduces the Current Account Deficit (CAD), which is very important for the strength of the economy. 4. Strengthening of Indian Rupee: When the oil bill decreases, the demand for dollars in the international market reduces. This strengthens the Indian rupee against the dollar. A strong rupee also helps in making other imported items (such as electronic goods, machinery) cheaper. 5. Reduction in Government Subsidy Burden: The government provides subsidies on items like LPG and kerosene. When crude oil becomes cheaper, the financial burden of subsidies on the government decreases. The government can invest this saved money in sectors like infrastructure, education, and health. 6. Increase in Corporate Profits: Crude oil is a main raw material for companies in the paint, tire, lubricant, fertilizer, and logistics sectors. When oil becomes cheaper, the costs of these companies decrease and profits increase, which also shows a positive impact on the stock market. According to experts, if crude oil prices decrease by $10 per barrel, India’s Current Account Deficit (CAD) could reduce by approximately 9-10 billion dollars and the inflation rate could also see relief of about 0.5%. Oil Prices Had Increased Due to Hormuz Closure After the war began, Iran had almost closed the Hormuz route. About 20% of the world’s oil and gas passes through this route. Its closure led to a sharp increase not only in oil prices, but also in the prices of aluminum, fertilizers, and plastics. The risk of shortages of medicines and essential items also increased in Britain and Europe, as shipping costs multiplied several times. Crude Oil Became 60% More Expensive in March In March, crude oil prices surged by about 60%, which was the biggest increase in a month since the 1990 Gulf War. At the end of February, Brent crude was at $72.48, which crossed $120 in March. Earlier in September 1990, during Saddam Hussein’s attack on Kuwait, oil prices had increased by 46% in one month. 51% of India’s total oil imports come from Gulf countries India is most dependent on West Asia for its crude oil needs. In the first 10 months of FY2025-26, this region accounted for 51% of India’s total crude oil and petroleum imports. With rising crude oil prices, India’s import bill was increasing rapidly. Inflation will increase by 0.60% if oil prices rise by $10 Earlier, rating agency CARE Ratings Global had said that every $10 per barrel increase in crude oil prices could push up retail inflation in India by up to 60 basis points (0.60%). India is largely dependent on West Asia for its oil needs, so deteriorating conditions there will also increase pressure on India’s current account deficit, GDP growth, and the value of the rupee.