Crude oil prices were falling in the international market for the last few days, but this trend did not last long. Today, on July 8, crude oil prices have increased by 3%. Brent crude has crossed $76 per barrel, while WTI crude is trading above $72 per barrel, up about 2.8%.
Why did crude oil prices increase?
On Tuesday, the US launched swift strikes against more than 80 Iranian targets in response to attacks on commercial ships in the Strait of Hormuz. During this action, the US completely destroyed Iran’s air defense system, coastal radar network and anti-ship cruise missile launch pads. The US also destroyed more than 60 boats of Iran’s Revolutionary Guard (IRGC).
The US took this military action after drone and missile attacks on three commercial oil tankers passing through the Strait of Hormuz – including the Qatar-flagged ‘Al-Raqqiyah’. Although Iran has not claimed responsibility for these attacks, American intelligence agencies hold Iran responsible for it. Following the US attack, Iran has threatened a strong response, raising tensions in the Middle East once again to critical levels. Air defense systems have been put on high alert in neighboring countries Kuwait and Bahrain.
Another big decision of America
Immediately after the attack, the US took another important step by canceling the special license (exemption from sanctions) under which Iran was allowed to sell oil. In June, an interim agreement was reached between the US and Iran, under which the US allowed Iran to legally sell its oil around the world for 60 days (until August 21, 2026). However, the US Treasury Department has now said in a new order that the exemption granted last month is being completely revoked.
impact on india
India had hoped that the entry of Iranian oil into the market would lower crude oil prices – which would also reduce domestic petrol and diesel prices – but these hopes have been dashed by the cancellation of licenses given to Iran. Experts estimate that if the situation does not normalize in the next 48 hours, crude oil prices may increase to $80-$85 per barrel. India imports 85% of its crude oil needs. As a result, imports will become costlier due to rising prices, which will lead to a sharp depletion of foreign exchange reserves and prices of petrol and diesel are likely to increase in the near future.