Crude oil prices experienced a decline of 1.86%, closing at Rs 9,168, as renewed optimism regarding diplomatic negotiations between the United States and Iran alleviated immediate concerns over supply disruptions. Market sentiment improved following remarks from US Secretary of State Marco Rubio, who indicated that there had been slight progress in mediated talks with Iran. Meanwhile, Tehran continued to review the latest US proposal delivered through Pakistan. Despite the improving diplomatic tone, uncertainty remains elevated regarding the final outcome of negotiations and the potential reopening of the Strait of Hormuz, which continues to sustain high levels of market volatility.

Additional pressure emerged from anticipations that significant OPEC+ producers might reach a consensus on a slight uptick in July output at their forthcoming June 7 meeting, despite several member nations grappling with operational challenges tied to the persistent Middle East conflict. China’s refined fuel exports are projected to see a modest uptick in June, as the nation navigates the interplay between export demand and domestic consumption requirements. Fundamentally, US inventory data continued to provide support, even in the face of market decline. According to the Energy Information Administration, US crude oil inventories experienced a notable decline of 7.9 million barrels last week, markedly surpassing the anticipated draw of 2.9 million barrels.

Crude inventories at the Cushing delivery hub experienced a reduction of 1.6 million barrels, alongside a decrease in petrol stocks by 1.5 million barrels. However, distillate inventories unexpectedly increased, which constrained bullish momentum. OPEC has revised its 2026 global oil demand growth forecast downward to 1.17 million barrels per day, a decrease from the previous estimate of 1.38 million. This adjustment is attributed to the economic repercussions stemming from the conflict in Iran. However, the organization anticipates a rebound in demand growth for the year 2027.

Barclays has upheld its forecast for Brent crude in 2026 at $100 per barrel, emphasising ongoing worries regarding constrained global inventory levels and supply shortages. From a technical perspective, the market is experiencing renewed selling pressure, evidenced by a 5.24% increase in open interest to 14,972 lots, alongside a price decline of Rs 174. Crude oil is maintaining support at Rs 8,963, with potential for further decline towards Rs 8,758, while resistance is identified at Rs 9,464 and Rs 9,760 levels.