Oil Price Today (July 21): Crude oil dips below $90 on hopes of 10-day ceasefire in Iran war. What are experts saying?

Oil prices edged lower on Tuesday as traders balanced reports of renewed diplomatic efforts between the U.S. and Iran with fresh military exchanges and Yemen's Houthis threatening a naval blockade of Saudi Arabia.

Crude oil price on July 21

Brent crude futures slipped 35 cents, or 0.4%, to $88.87 a barrel, while U.S. West Texas Intermediate crude for September delivery was little changed at $82.47 a barrel. Both benchmarks remained below the more than one-month highs touched in the previous session.

On Monday, Yemen's Iran-backed Houthis announced plans to impose a naval blockade on Saudi Arabia, potentially opening another front against the U.S. in its conflict with Iran and increasing concerns over disruptions to global energy supplies and trade beyond the Gulf.


At the same time, a senior Iranian official told Reuters that Tehran had received a proposal from mediators for a 10-day ceasefire. The proposal is part of efforts to preserve the interim agreement signed on June 17, which was aimed at creating a pathway to a permanent deal to end the conflict that began on February 28 following U.S.-Israeli attacks on Iran.

The diplomatic initiative came after another night of U.S. strikes on Iranian cities and retaliatory attacks by Iran's Revolutionary Guards on U.S. military assets across the region. Later on Monday, U.S. Central Command said it had launched another round of strikes on Iran.

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What’s next?

Goldman Sachs said Brent crude could move above $110 a barrel in the fourth quarter if the recovery in Gulf oil exports remains delayed. However, the investment bank expects prices to fall back into the $60s by the end of the year if geopolitical tensions ease and production rebounds faster than expected.

"At the current point there are no signs of a ceasefire again. But in case there is a ceasefire immediately imposed, we don't expect Brent oil prices to fall beyond $70 per barrel. It is likely to remain the lower support for the near term," Pranav Mer, Senior Vice President, Currency and Commodity at JM Financial, told ETMarkets.

According to Anindya Banerjee, Head of Commodity Research at Kotak Securities, crude oil has once again begun pricing in geopolitical risks. "Any strike on major Gulf export infrastructure could force a retest of $95-100 and beyond," he said.

Banerjee added that markets are reacting less to the military action itself and more to the diminishing chances of diplomacy. He said Tehran has laid down fresh conditions for resuming negotiations, with each new development pushing back the return of normal tanker movement through the Strait of Hormuz, where traffic has already remained well below pre-war levels.

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Nuvama Institutional Equities warned that an extended closure of the Strait of Hormuz could disrupt nearly 20 million barrels a day of crude oil flows. Under such a scenario, the brokerage said oil prices could surge to between $110 and $150 a barrel.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)