Crude oil prices experienced a notable decline of 3.57%, settling at Rs 9,698. This movement reflects the market’s attempt to reconcile rising geopolitical risks with the potential that the current tensions are merely components of ongoing negotiations. Renewed clashes between the United States and Iran in the Strait of Hormuz, including attacks on vessels and defensive responses, initially heightened concerns regarding supply disruptions.

However, the lack of a comprehensive escalation and ongoing attempts to sustain shipping routes resulted in profit booking and price correction. Reports of missile interceptions by the UAE and disruptions at the Fujairah terminal have sustained elevated volatility, while ongoing uncertainty regarding a lasting resolution continues to shape sentiment. On the supply side, OPEC+ confirmed a production increase of 188,000 barrels per day for June, which is slightly lower than the previous month’s hike. This adjustment reflects a cautious approach amid evolving group dynamics following the exit of the United Arab Emirates.

Simultaneously, the inventory data from the United States offered robust foundational backing. Crude stocks decreased by 6.233 million barrels, a figure that notably surpassed forecasts, while gasoline and distillate inventories also experienced drawdowns that were larger than anticipated. Refinery activity showed signs of improvement, while a significant decline in net crude imports further constrained domestic supply conditions. The demand outlook, however, exhibits a mixed picture. OPEC has adjusted its global oil demand forecast for the second quarter, reducing it by 500,000 barrels per day, citing temporary weakness associated with geopolitical uncertainties. Notwithstanding this, full-year demand growth forecasts remain consistent, with anticipations of a rebound in the latter half.

From a technical perspective, the market is experiencing long liquidation, evidenced by a 13.4% decrease in open interest to 14,371 lots, alongside a price decline of Rs 359. Immediate support is identified at Rs 9,538, with potential further decline towards Rs 9,378. On the upside, resistance is positioned at Rs 9,962, and a sustained move above this level could propel prices toward Rs 10,226.