Oil Plunges Sharply as Ceasefire Lifts Market Sentiment

Oil prices recorded their steepest fall in almost six years while global equities surged after the United States and Iran agreed to a two-week ceasefire, offering markets respite from turbulence driven by the Middle East conflict.

West Texas Intermediate tumbled as much as 19 percent after President Donald Trump agreed to suspend bombing of Iran, a move expected to help resume oil flows through the Strait of Hormuz. Iran said safe passage through the waterway would be possible during this period. Global benchmark Brent crude declined 12 percent to $95.96 per barrel.

Meanwhile, gold was trading at $4,799 per ounce, up 2 percent from the previous close, while silver jumped 4.7 percent to $76.44 per ounce.

The ceasefire proposal, announced just hours before a threat to escalate bombing of Iran, has revived risk sentiment after turmoil that drove stocks lower and pushed several gauges into correction territory since the Middle East conflict began six weeks ago. Analysts said the sustainability of the cross-asset relief rally will depend on confirmation that the ceasefire will hold and that energy flows through the Strait of Hormuz normalise.

Gold has fallen as much as 25 percent from peak to trough since the conflict began, as a surge in energy prices fuelled inflation concerns and reinforced a hawkish shift in central bank outlooks. Experts said MCX Gold June futures are likely to rise to Rs 152,500 per 10 grams, while MCX Silver May futures are expected to climb to Rs 245,000 per 10 grams as sentiment improves in international markets.

The Reserve Bank of India's Monetary Policy Committee will conclude its meeting today, with the decision scheduled at 10:00 am. The market expects the MPC to keep the repo rate unchanged at 5.25 percent. A neutral stance is likely to continue, balancing global risks such as tensions in West Asia with domestic liquidity support while avoiding further rate cuts unless growth weakens.