Crude oil prices on MCX traded lower on Wednesday, May 27, tracking weakness in global benchmarks as investors weighed the prospects of a potential US-Iran agreement that could eventually reopen the Strait of Hormuz and stabilise global energy flows.
MCX crude oil futures were down nearly 1.7%, while international benchmark Brent crude slipped 0.3% to around $99.27 per barrel. US West Texas Intermediate (WTI) crude also declined 0.7% to $93.24 per barrel during early Asian trade.
The decline comes after oil prices surged sharply in the previous session following renewed military strikes involving the United States and Iran. However, markets are now focusing on diplomatic signals suggesting that negotiations between Washington and Tehran are still progressing despite the latest escalation.
According to reports, Tehran has indicated that the recent strikes would not derail ongoing talks, while US Secretary of State Marco Rubio said it may take a few more days to finalise a potential agreement.
A key focus for markets remains the Strait of Hormuz, one of the world’s most important oil and LNG shipping routes. Investors are closely watching whether a deal could eventually restore normal energy flows through the region after recent disruptions heightened fears of supply shortages.
Capital Economics senior climate and commodities economist Kieran Tompkins noted that oil options data suggests investors broadly expect prices to ease over the next three months, although conviction levels remain unusually low due to persistent geopolitical uncertainty.
According to Tompkins, market positioning indicates traders currently see the reopening of the Strait of Hormuz and resumption of flows as the most likely outcome. However, options markets are still pricing in nearly a 37% probability of oil prices remaining above $100 per barrel over the next three months, highlighting lingering concerns around supply risks and geopolitical instability.
The recent conflict has disrupted sentiment across commodity markets, with traders balancing hopes of diplomatic progress against the possibility of further escalation in West Asia.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Commodity market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information.