Crude oil prices fall 1% on US-Iran 60-day ceasefire extension reports
Synopsis
Unconfirmed reports of a US-Iran 60-day ceasefire MoU — promising unrestricted Strait of Hormuz shipping — pulled Brent crude below $93 on Friday. But with Trump yet to sign off and Tehran silent, the relief may be short-lived. Meanwhile, India is quietly absorbing ₹550 crore a day in fuel losses to shield consumers from a crisis that has already pushed prices up 20–67% across the neighbourhood.
Key Takeaways
Brent crude fell 1.12% to $92.66 a barrel and WTI dropped 1.18% to $87.86 on 29 May .
Reports indicate a US-Iran 60-day MoU would guarantee unrestricted shipping through the Strait of Hormuz and require Iran to remove mines within 30 days .
The deal has not yet been approved by US President Donald Trump ; Iran has also not confirmed acceptance.
India's state-owned oil firms are absorbing losses of ₹550 crore per day to protect domestic consumers from global price spikes.
The government cut petrol and diesel excise by ₹10 per litre on 27 March 2026 ; Indian retail prices have risen only 8–9% versus 20–67% in neighbouring economies.
Global crude oil prices slipped nearly 1 per cent in early trade on Friday, 29 May, after reports emerged that the United States and Iran had agreed to a 60-day memorandum of understanding (MoU) to extend an existing ceasefire. The development eased fears of a prolonged supply disruption through the Strait of Hormuz, one of the world's most critical energy chokepoints.
Where Prices Stood
At 11:15 am IST, international benchmark Brent crude traded at $92.66 a barrel, down 1.12 per cent. US West Texas Intermediate (WTI) fell 1.18 per cent to $87.86 a barrel. The declines followed a volatile session on Thursday, when prices had surged after US strikes on a military site in Bandar Abbas.
What the Reported MoU Says
According to US officials cited in reports, the proposed 60-day MoU would guarantee unrestricted commercial shipping through the Strait of Hormuz. Under its terms, Iran would be required to remove mines within 30 days and end toll collection from the Strait. The US naval blockade would be lifted proportionally as commercial shipping is restored.
Notably, the deal has not yet received final approval from US President Donald Trump, and Iran has also not confirmed its acceptance of the MoU, leaving markets in a cautious holding pattern.
Why the Strait of Hormuz Matters
The Strait of Hormuz is a narrow waterway through which roughly a fifth of global oil and liquefied natural gas (LNG) trade passes. Any sustained disruption there ripples immediately into global energy prices. This is why even unconfirmed reports of a ceasefire extension were sufficient to pull prices lower — markets are acutely sensitive to signals from this corridor.
India's Fuel Price Shield
The escalating global oil prices have placed significant strain on India's public sector energy companies. The Ministry of Petroleum and Natural Gas said earlier this week that state-owned oil firms are currently absorbing losses of ₹550 crore per day by refraining from passing on the full increase in global prices to domestic consumers.
The government had already cut petrol and diesel excise duty by ₹10 per litre on 27 March 2026. As a result, Indian retail fuel prices have risen by only 8 to 9 per cent since the crisis began — compared with increases of 20 to 67 per cent in neighbouring economies. The ministry added that supplies of crude, petrol, and diesel remain adequate, though localised shortages due to panic buying have been flagged.
What to Watch Next
Final confirmation from both Washington and Tehran on the MoU remains the key trigger for oil markets. Any breakdown in negotiations — or further military escalation near Bandar Abbas — could swiftly reverse Friday's price relief. For India, the pace at which global prices stabilise will determine how long public sector oil companies can continue absorbing losses without a retail price correction.
Point of View
The ₹550-crore-a-day subsidy burn is the more pressing story: it is a fiscal pressure building quietly beneath the headline price moves. If the MoU collapses or escalation resumes near Bandar Abbas, India's retail price shield — already stretched — will face a reckoning that excise cuts alone cannot absorb.
NationPress
9 Aug 2026
Frequently Asked Questions
Why did crude oil prices fall on 29 May 2026?
Crude oil prices fell nearly 1 per cent on 29 May 2026 after reports emerged that the US and Iran had agreed to a 60-day MoU to extend a ceasefire and guarantee unrestricted shipping through the Strait of Hormuz. The reports eased fears of a prolonged supply disruption from the region.
Has the US-Iran ceasefire MoU been finalised?
No. As of 29 May, the MoU had not received final approval from US President Donald Trump, and Iran had also not confirmed its acceptance. Markets were reacting to unconfirmed reports, making the price relief potentially short-lived.
What is the Strait of Hormuz and why does it matter for oil prices?
The Strait of Hormuz is a narrow waterway between Iran and Oman through which roughly a fifth of global oil and LNG trade passes. Any disruption there directly impacts global energy supply and prices, making it one of the most closely watched chokepoints in the world.
How is India protecting consumers from rising global oil prices?
India's public sector oil companies are absorbing losses of ₹550 crore per day by not passing on the full increase in global prices to consumers. The government also cut petrol and diesel excise duty by ₹10 per litre on 27 March 2026, limiting the retail price rise to 8–9% compared to 20–67% in neighbouring economies.
What triggered the oil price spike before Friday's decline?
On Thursday, oil prices jumped after US strikes on a military site in Bandar Abbas, Iran, heightening fears of a broader conflict and supply disruption through the Strait of Hormuz. Friday's ceasefire extension reports partially reversed that move.
