US-Iran peace deal eases oil risk premium, supply risks persist

Oil prices fell sharply on reports of a US-Iran peace deal, with Brent down 4.36% to $83.57/barrel and WTI down 4.70% to $80.89, unwinding geopolitical risk premiums from a peak near $120 on 2 March. However, analysts warn supply normalization will be slow as 10-12 million bpd remains offline due to Strait of Hormuz disruptions and damage to refining/LNG infrastructure, with the IEA projecting oil market deficits through Q4 2026. For India, which imports ~90% of its crude at a $123 billion annual bill, the price easing offers fiscal relief though the RBI has already raised FY27 inflation forecast to 5.1% and OMCs hiked petrol/diesel by ₹7.5/litre in mid-May.