Crude oil prices experienced a significant decline of 3.84%, settling at Rs 6,983, as the easing of geopolitical tensions in the Middle East alleviated concerns regarding potential supply disruptions. Market sentiment improved following reports of advancements in negotiations between the United States and Iran. Iranian Foreign Minister Abbas Araghchi noted that discussions conducted in Switzerland had made considerable strides toward regional stability. Mediators from Qatar and Pakistan have signalled that both parties have consented to a 60-day roadmap designed to facilitate a more comprehensive agreement, while technical discussions and monitoring mechanisms are ongoing.

The ongoing transit of vessels through the Strait of Hormuz, coupled with reports of increasing Iranian crude exports—especially discounted shipments to China—has contributed to a reduction in concerns surrounding global oil supply. Fundamental data presented a varied outlook for the market. The U.S. Energy Information Administration reported a decline in total U.S. crude inventories to 758.5 million barrels, marking the lowest level since March 1985. Commercial crude oil stocks experienced a notable decline of 8.262 million barrels, bringing the total to 418.2 million barrels. This reduction significantly surpassed market expectations, which had anticipated a draw of 4.6 million barrels.

Inventories at the Cushing, Oklahoma delivery hub experienced a decline of 1.606 million barrels. Refinery activity showed signs of improvement, as crude runs increased by 230,000 barrels per day, accompanied by a rise in utilisation rates of 1.4 percentage points. Petrol inventories decreased by 0.906 million barrels, whereas distillate stocks saw an increase of 0.951 million barrels. Net crude imports experienced a decrease of 241,000 barrels per day. Meanwhile, Iraq increased its southern crude production by about 500,000 barrels per day to reach 1.5 million bpd, contributing to alleviating supply concerns.

OPEC’s output in May continued to reflect historically low levels, influenced by disruptions impacting Iran and various Gulf producers. Technically, the market is experiencing renewed selling pressure, as evidenced by a 38.34% increase in open interest to 12,278 contracts, coinciding with a significant decline in prices. Crude oil exhibits immediate support at Rs 6,834, with subsequent support at Rs 6,685. Resistance is positioned at Rs 7,257, and a breach of this threshold may pave the way toward Rs 7,531.