Crude oil prices experienced a significant decline of 5.62%, closing at Rs 9,463, as market participants exhibited a cautiously optimistic outlook regarding potential diplomatic advancements between the US and Iran, thereby diminishing the immediate geopolitical risk premium. While President Trump suggested that the conflict might conclude “very quickly,” he also cautioned about the potential for renewed strikes should negotiations falter, thereby maintaining a heightened level of uncertainty.

Iran’s threat to broaden the conflict should the US and Israel recommence attacks sustained underlying risk concerns; however, the prevailing sentiment appeared to trend towards a reduction in tensions. Despite this, strategic disruptions in the Strait of Hormuz continue to pose a significant supply risk, as the route remains partially constrained even with the resumption of limited vessel movement. On the supply side, global crude dynamics exhibited a range of mixed signals. Saudi Arabia’s crude exports declined to a historic low of 4.974 million barrels per day in March, with production also reaching multi-year lows, indicative of a concerted effort to restrain output.

In the United States, data from the Energy Information Administration indicated a more pronounced than anticipated reduction in crude inventories, amounting to 7.9 million barrels. This was accompanied by a decrease of 1.5 million barrels in petrol stocks, while distillate inventories experienced an increase of 372,000 barrels. Refinery utilisation dipped marginally, suggesting a stable yet somewhat diminished level of processing activity. Macro outlook remained under pressure as OPEC adjusted its 2026 global oil demand growth forecast to 1.17 million barrels per day from 1.38 million, attributing this revision to diminished consumption expectations in light of geopolitical uncertainty. However, OPEC continues to anticipate a recovery in demand by 2027.

Citi and Wood Mackenzie underscored a significant divergence in price scenarios, indicating that upside risks could escalate to between $120 and $200 per barrel in the event of prolonged disruptions in the Strait of Hormuz. Technically, the market is experiencing long liquidation, evidenced by a notable decline in open interest, which decreased sharply by 17.46% to 13,541, coinciding with a significant drop in prices. Support is positioned at Rs 9,198, with subsequent support at Rs 8,934. Resistance levels are identified at Rs 9,915 and Rs 10,368.