Crude oil prices experienced a decline of 1.45%, settling at Rs 7,054, which represents the lowest closing level since early March. This downturn in market sentiment can be attributed to reports of a breakthrough agreement between the United States and Iran, intended to resolve the extended conflict that has significantly impacted global energy supplies. The signing of an interim agreement and the gradual reopening of the Strait of Hormuz have enhanced expectations for a normalisation of oil flows from the Persian Gulf. Early signs of recovery were evident as numerous oil tankers and LNG vessels recommenced transit through the crucial shipping route.

A complete reopening may allow leading producers like Saudi Arabia, the UAE, and Iraq to reinstate substantial quantities of production that had been previously suspended. Despite the decline in prices, the underlying supply fundamentals continued to provide support. U.S. crude oil inventories experienced a decline of 8.26 million barrels for the week ending June 12, a figure that notably surpassed market anticipations of a 4.6 million-barrel reduction. Stocks at the Cushing delivery hub decreased by 1.61 million barrels, whereas petrol inventories experienced a slight decline, suggesting consistent fuel demand. Refinery activity has seen an uptick, as crude processing rates and utilisation levels have both risen.

However, distillate inventories recorded an increase, partially counterbalancing the positive inventory data. In May, OPEC production experienced a significant decline, dropping to 16.13 million barrels per day, marking the lowest level observed in over twenty years. The decline was primarily driven by reduced Iranian exports and disruptions among Gulf producers during the conflict period. Despite the intentions of OPEC+ members to boost production, geopolitical factors hindered significant growth in output.

Crude oil is currently experiencing renewed selling pressure, as evidenced by an 18.83% increase in open interest in conjunction with declining prices, suggesting the entry of new short positions into the market. Immediate support is identified at Rs 6,928, with a breach below this level likely to exacerbate losses toward Rs 6,803. Resistance is positioned at Rs 7,147, and an upward movement beyond this threshold may initiate a recovery towards Rs 7,241.