Global oil prices fell sharply this week after US President Donald Trump indicated that a peace agreement with Iran could be close and revealed that previously planned military strikes had been called off.
This pushed Brent crude below $90 per barrel and WTI crude near $79. At the time of press, WTI stood at $84 per barrel.
Markets also reacted to expectations that tensions around the strategically important Strait of Hormuz could eventually ease.
The drop in crude prices has provided some relief to consumers across the globe, but not much in Pakistan.
“We are closer to a peace deal than ever before. With finalisation likely expected in the next 24 hours, Pakistan is preparing for the electronic signing of the peace deal immediately after, followed by technical level talks next week, Prime Minister Shehbaz Sharif tweeted shortly after Trump’s Truth Social post on advanced peace talks.
He added, “We would like to thank United States of America and Islamic Republic of Iran for their ongoing commitment during the negotiations, and we extend our sincere appreciation to our brothers in the region for their support. We are confident that this historic peace deal will form a strong foundation for lasting peace”.
Meanwhile, energy remains a major contributor to inflationary pressures and US and European nations suffer most from it.
US consumer prices increased 4.2 percent year-on-year in May, marking the fastest annual inflation rate in three years. Energy-related costs accounted for a significant share of the monthly rise in inflation, affecting transportation, utilities, and other sectors.
According to GasBuddy, lower crude oil prices and improved refinery performance have helped bring gasoline prices down. But fuel markets still remain highly sensitive to geopolitical developments.
Despite recent price declines, concerns persist over disruptions to global oil supplies. Any escalation in tensions around the Strait of Hormuz could quickly reverse the downward trend and push fuel prices higher again.