Crude oil prices experienced a significant rebound, closing 3.77% higher at Rs 7,377 due to value buying as markets reevaluated the geopolitical situation in the Strait of Hormuz. Iran has declared a temporary shipping agreement with Oman; however, officials have specified that this does not signify a complete reopening of the strategic waterway. Concurrently, optimism regarding a potential U.S.-Iran agreement bolstered market sentiment; however, renewed security concerns persisted following reports from the UK Navy of explosions near a tanker. Additionally, Iran-backed Houthi militants asserted attacks on a Saudi oil tanker and issued threats against further vessels in the Red Sea.

Goldman Sachs upheld its forecast for Brent crude to remain within an 80-90 per barrel range until a formal U.S.-Iran nuclear agreement is established or regional tensions intensify further. Fundamental data revealed a varied supply landscape. U.S. crude production experienced a decline of approximately 2% in May, reaching 13.71 million barrels per day, down from the record level recorded in April. In contrast, exports surged to a new all-time high of 5.73 million barrels per day, indicative of robust overseas demand in the context of supply disruptions in the Middle East. Weekly EIA data revealed an unexpected rise in U.S. crude inventories, which increased by 2.479 million barrels, contrary to expectations for a draw.

Additionally, stocks at the Cushing delivery hub also experienced an uptick. However, petrol inventories declined by 1.643 million barrels and distillate stocks fell by 3.473 million barrels, indicating robust fuel demand. Meanwhile, OPEC+ has sanctioned a production quota increase of roughly 188,000 barrels per day starting in September, thereby finalising the reversal of a previous voluntary output reduction. However, actual supply expansion may continue to be constrained by persistent export disruptions.

Crude oil experienced short covering, evidenced by a 16.52% decrease in open interest concurrent with the price recovery. Immediate support is positioned at Rs 7,173, with subsequent support at Rs 6,969, while resistance is identified at Rs 7,518. A sustained breakout above this level could extend gains toward the Rs 7,659 zone, maintaining a positive near-term outlook.