Hot Commodities: Oil crashes by 20% as ceasefire hopes cool war premium

Crude oil prices plunged sharply, with WTI futures falling nearly 20% to around $91 per barrel, as easing geopolitical tensions reduced immediate supply concerns. The decline followed signals from Donald Trump indicating a delay in military action and progress toward reopening the critical Strait of Hormuz. The development triggered a swift unwinding of the war-driven price spike, dragging MCX crude futures down over 16%, to ₹8,893 per barrel. Despite the sharp correction, the U.S. Energy Information Administration warned of tightening global supply in its monthly short term energy outlook report released yesterday. The agency is projecting crude prices to climb toward $115 per barrel in the second quarter of 2026 due to ongoing risks of production disruptions across key Gulf producers. While the recent dip offers temporary relief, oil markets remain highly sensitive to geopolitical developments, keeping traders and policymakers on edge.

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