Crude oil prices experienced a significant decline of 4.24%, settling at Rs 6,669. This movement reflects increasing indications of enhanced global supply conditions alongside a reduction in geopolitical risks. Market sentiment showed signs of deterioration as an increasing number of oil tankers readied for transit through the Strait of Hormuz, alleviating fears regarding potential supply disruptions originating from the Middle East. Additional pressure emerged from reports indicating that physical crude cargoes are being offered at discounts across major markets, as heightened supplies from the Middle East exert downward pressure on global pricing.

Iran is anticipated to increase oil exports after receiving a temporary 60-day sanctions waiver from the United States, while the alleviation of tensions in Lebanon has contributed to a decline in market risk premiums. Despite the recent peace developments, uncertainty persists concerning the long-term stability of the U.S.-Iran agreement. U.S. President Donald Trump asserted that Iran had consented to perpetual nuclear inspections; however, Iranian officials refuted such claims, casting doubt on the future of the agreement. In light of a more subdued market perspective, J.P. Morgan has revised its Brent crude projections for the latter half of 2026, attributing this adjustment to inventory draws that fell short of expectations and a decline in anticipated global demand.

On the inventory front, U.S. crude oil stocks experienced a decline of 6.09 million barrels during the week, surpassing expectations of a 4.5 million-barrel draw and signalling robust refinery demand. However, the supportive inventory data was counterbalanced by significant increases in petrol and distillate fuel stocks, indicating a deceleration in end-user consumption. Meanwhile, net crude imports experienced a modest increase, contributing to the availability of supply. OPEC output in May declined to its lowest level in over twenty years, attributed to disruptions stemming from the Iran conflict and shipping constraints.

Nevertheless, the anticipation of recovering Iranian exports continues to shape market sentiment. Crude oil is currently experiencing renewed selling pressure, evidenced by a 23.55% increase in open interest to 15,738 lots, alongside a decline in prices, which suggests the establishment of new short positions. Immediate support is observed at Rs 6,530, with additional downside potential towards Rs 6,390. Resistance is positioned at Rs 6,884, and a breach above this threshold may initiate a recovery towards Rs 7,098.