Crude oil prices experienced a notable increase of 3.62%, concluding at Rs 8,726, driven by rising geopolitical tensions in the Middle East alongside constricting supply fundamentals. Market sentiment exhibited considerable sensitivity following the resurgence of military exchanges between the United States and Iran. U.S. President Donald Trump issued a warning regarding the possibility of further strikes on Iranian infrastructure, as Iran maintained its restrictions on shipping through the Strait of Hormuz, a vital passage that typically facilitates nearly one-fifth of global crude oil and LNG trade.

While certain shipping operations have recommenced, the prevailing uncertainty related to the conflict persists in bolstering risk premiums within the oil markets. Supply-side developments have further reinforced price levels. Crude oil inventories, as reported by the U.S. Energy Information Administration, experienced a decline of 7.2 million barrels, bringing the total to 426.5 million barrels for the week ending June 5. This decrease notably surpassed the anticipated reduction of 4 million barrels. Crude stocks at the Cushing, Oklahoma delivery hub experienced a decline of 801,000 barrels.

Refinery utilisation rose to 95.3%, indicative of strong processing activity. Petrol inventories experienced a modest increase of 0.2 million barrels, whereas distillate stocks saw a decrease of 0.2 million barrels, reflecting ongoing robustness in the demand for refined products. Global supply concerns intensified as OPEC output in May dropped by 1.06 million barrels per day to 16.13 million bpd, marking the lowest level in over two decades. Iranian exports have declined to levels not seen in several years due to sanctions and military disruptions, while logistical issues related to the Strait of Hormuz have impacted other Gulf producers.

Planned OPEC+ production increases were largely counterbalanced by these supply constraints. Technically, the market is experiencing short covering, as open interest has decreased by 21.98% to 9,148 lots, coinciding with a significant rise in prices. Immediate support is identified at Rs 8,457, with additional support at Rs 8,187. Resistance is positioned at Rs 8,876, and a sustained breakout above this threshold could propel prices toward Rs 9,025.