Crude oil prices experienced a significant decline of 5.64%, settling at Rs 7,214, as the alleviation of geopolitical tensions diminished concerns regarding potential supply disruptions from the Middle East. Market sentiment improved following Qatar’s confirmation that a draft proposal to restart U.S.-Iran negotiations was being circulated. U.S. President Donald Trump characterised the proposal as Tehran’s final opportunity for a diplomatic agreement and expressed confidence that the Strait of Hormuz would reopen soon. Iran has refuted claims of engaging in direct negotiations with the United States; however, it has acknowledged that discussions with Oman aimed at enhancing shipping through the strategic waterway are advancing.

Additional supply-side support was observed as Turkey and Iraq extended a crucial oil pipeline agreement, Kazakhstan reinstated crude flows via the Caspian Pipeline Consortium, and OPEC+ sanctioned a production increase of 188,000 barrels per day for September, thereby concluding the rollback of voluntary production cuts implemented in 2023. Fundamental data exhibited a mixed picture, notwithstanding the pronounced price decline. The CFTC reported that WTI crude oil speculative net long positions increased by 28,159 contracts to 106,507 contracts, indicating sustained bullish positioning among money managers.

U.S. crude production experienced a decline of approximately 2% in May, settling at 13.71 million barrels per day. In contrast, exports achieved a new record high, reaching 5.73 million barrels per day. The latest EIA report indicated a decline in U.S. crude inventories by 7.2 million barrels, bringing the total to 404.5 million barrels, a figure that notably surpassed market expectations. Petrol inventories experienced an uptick of 7,000 barrels, whereas distillate stocks saw an increase of 1.1 million barrels. This suggests that fuel supplies remain sufficient, even with refinery utilisation at a robust 97.2%.

From a technical perspective, crude oil continued to experience fresh selling pressure, as evidenced by a 12.72% increase in open interest, which suggests the establishment of new short positions. Immediate support is identified at Rs 6,980, with subsequent support at Rs 6,747, while resistance is established at Rs 7,653. A sustained move above this level could trigger a recovery towards Rs 8,093, although the current technical structure continues to favour a cautious near-term outlook.