Petrol and diesel prices remained steady on Monday, while markets opened on an upbeat note on May 4. Global oil prices jumped sharply after Iran’s war with the US and Israel began on February 28. However, the Indian government continues to cushion consumers from volatility in the global oil market.
Positive sentiment flooded the market after US President Donald Trump said on Sunday that Washington would guide ships not involved in the Iran conflict through the strategic waterway – the Strait of Hormuz – from Monday. Although there has been no sign of progress in peace talks with Iran, the US will free ships stuck on a critical trade route that carries one-fifth of global exports.
In a post on Truth Social, Trump wrote: “We will safely remove their ships from these restricted waterways so they can go about their business freely and efficiently. Again, these are ships from areas of the world that are in no way involved in what is happening in the Middle East right now.”
He added: “I have told my representatives to inform them that we will make every effort to get their ships and crews safely out of the strait. In all cases, they have said they will not return until the area is safe for navigation and everything else. That process, Project Freedom, will begin Monday morning EST.”
Meanwhile, a senior Iranian official warned that Tehran would consider it a ceasefire violation if the US intervenes in the strait, AFP reported. Meanwhile, Brent crude, which is currently trading around $108 a barrel, fell sharply – initially down 2.4%, before erasing those losses to fall 0.5%.
Trump described discussions with Iran as “very positive” after receiving Washington’s response to his latest 14-point proposal to end the war. The past two months have witnessed disruptions in energy supplies due to the blockade of the Strait of Hormuz trade route.
In its latest proposal, Iran demanded a complete end to the conflict within 30 days. Tehran also called for guarantees against renewed strikes, Iran’s Tasnim News Agency reported. Tehran reiterated earlier demands in its peace plan, demanding the withdrawal of US forces from the region around Iran. In addition to paying reparations, she also demanded the lifting of sanctions and the naval blockade.
Impact of increased oil prices on aviation
According to Sparta Commodities senior oil analyst Abhishek Kumar, Indian aviation is sensitive to oil prices and losses will be more difficult to absorb if fuel prices remain elevated.
“If the fuel shock remains elevated, there is a risk that losses will become harder to absorb, flights will be canceled and government intervention may be needed to protect connectivity and prevent deeper stress across the sector,” ANI quoted Abhishek Kumar as saying.
Elaborating on the vulnerability of the aviation sector, he added, “India is more sensitive because ATF is already a large cost item and the aviation sector is highly price sensitive. Airlines can raise prices on some routes but cannot go beyond full cost without hurting demand.”
