Crude Oil Price Crashes On May 6: Brent Falls Near $100 Mark - Will Petrol Price Hike Plan Be Put On Hold?

Global crude oil prices plunged sharply on May 6, reversing earlier gains and easing pressure on energy markets after geopolitical tensions showed signs of cooling. The steep fall comes amid indications that the fragile ceasefire between the United States and Iran is holding, reducing fears of an immediate supply disruption in West Asia.

Benchmark crude prices saw significant declines, with US West Texas Intermediate (WTI) crude dropping 8.19% to $93.89 per barrel. Brent crude, the international benchmark, fell 7.39% to $101.75, slipping closer to the psychologically important $100 mark after trading well above $110 earlier this week. Murban crude also declined 6.75% to $98.82.

It comes after the US and ​Iran started closing ‌in on a one-page ​memo to ​end their war, Reuters reported citing ⁠a Pakistani ​source involved ​in the peace efforts.

"We will close this ​very ​soon. ⁠We are getting ​close," the ​source ⁠said.

The sharp correction follows a volatile start to the week, when oil prices surged more than 4% amid escalating tensions. Iran had launched drone and missile attacks targeting the United Arab Emirates, while the United States reportedly responded by targeting Iranian vessels in the Strait of Hormuz - a critical route for global oil shipments. These developments had sparked fears of a broader conflict and potential supply shocks.

However, with no further escalation and diplomatic signals suggesting restraint on both sides, markets have recalibrated. Analysts say the latest drop reflects a partial unwinding of the geopolitical risk premium that had been built into prices over recent sessions.

The broader energy complex also mirrored the downward trend. Gasoline prices fell sharply by 5.34%, while heating oil dropped 6.45%. Natural gas prices edged lower by 1.36%. Among crude variants, the Indian basket declined 5.25% to $112.47, while Western Canadian Select fell 4.41%. Dubai crude and Oman crude also recorded modest losses.

Source: oilprice.com

That said, the picture remains mixed across regions. The OPEC basket price rose 1.54%, and some grades such as the Mexican basket and Louisiana Light posted gains, reflecting differing supply-demand dynamics and contract structures.
Despite the steep fall, crude prices remain elevated compared to historical averages, and volatility is expected to persist. Market participants continue to closely monitor developments in West Asia, particularly around the Strait of Hormuz, given its strategic importance to global energy flows.

Petrol and Diesel Price Hike In India

For India, the world's third-largest importer of crude oil, the correction offers some temporary relief. However, the recent period of sustained high prices has already put pressure on state-run oil marketing companies (OMCs), which have kept retail fuel prices largely unchanged since 2022.

There are growing indications that the government may allow a revision in domestic fuel prices. Reports suggest discussions are underway to permit OMCs to pass on rising input costs to consumers, marking a potential shift after years of price stability.

Industry estimates indicate that petrol and diesel prices could increase by ₹4 to ₹5 per litre if such a move is approved. Domestic LPG cylinder prices may also rise by ₹40 to ₹50. If implemented, this would be the first upward revision in fuel prices in nearly four years.

Even as crude prices dip for now, the outlook remains uncertain. Any renewed geopolitical flare-up could quickly push prices higher again, keeping policymakers and consumers on edge.

Going forward, the trajectory of crude oil prices will depend largely on geopolitical stability in West Asia. While the current ceasefire has provided temporary respite, markets remain on edge, with any fresh escalation likely to trigger another surge in prices.