Iran Set To Charge Hormuz Transit; WTI Crude At $102 Per Barrel

The oil prices cooled off on Tuesday, March 31 with the US West Texas Intermediate (WTI) crude declining by 0.09% to $102 per barrel, and Brent crude futures falling by 1.08% to $111.56 per barrel.

Meanwhile, WTI crude futures for May dropped 98 cents, or 0.95%, to $101.90 per barrel.

The May contract expires on Tuesday, while the more actively traded June contract was quoted at $105.76.

What's crude oil prices are falling today?

The US President Donald Trump signalled that he might halt its military strikes on Iran even if the crucial maritime chokepoint of Strait of Hormuz will remains majorly shut as compared to transits pre-war, as per The Wall Street Journal report.

This comes after Trump warned that the US would attack Iran’s energy infrastructure and oil facilities if the West Asian country did not reopen the key shipping route.

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Iran’s closure of the Strait of Hormuz — a vital passage delivering one-fifth of global oil and gas supply  — has triggered a rally in crude prices, and especially impacted Asian countries such as China and India.

In March, Brent crude futures have rallied 59%, recording its biggest monthly gain since May 2020.

Meanwhile, Iran, the US, and Israel, Kuwait Petroleum Corporation, on challenges linked to energy supplies amid the US-Iran war noted that fully loaded crude tanker Al Salmi, with a capacity of up to 2 million barrels, was hit in an alleged Iranian attack at a Dubai port, as per a Reuters report. 

OMC Outlook Amid Crude Volatility

Amid volatile prices, and centre's Rs 10 excise duty relaxation on both petrol and diesel, marketing margins for oil marketing companies (OMCs) may continue to be negative despite the aid, according to a brokerage note.

"We estimate that marketing margins for OMCs may continue to be negative despite the excise duty cuts, but on an integrated basis, IOCL (IOCL IN, Buy) may be close to breakeven, while HPCL (HPCL IN, Buy) may still be losing significantly," Nomura noted.

"We estimate IOCL / BPCL (BPCL IN, Buy) / HPCL to see integrated GRM benefits of USD12/bbl/USD15/bbl/USD20/bbl from the excise duty cuts on petrol and diesel," it said.