Crude oil futures experienced significant gains on Wednesday as fresh military exchanges between the US and Iran heightened concerns over supply disruptions in West Asia. According to The Hindu BusinessLine, June crude oil futures were trading at ₹9055 on Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday, up by 1.17% from the previous close of ₹8950. July futures were trading at ₹8777 against the previous close of ₹8688, up by 1.02%. August Brent oil futures were at $96.89, up by 0.93%, while July crude oil futures on WTI (West Texas Intermediate) were at $94.71, up by 1.01%. The latest developments come as investor sentiment was also supported amid reports that Israel had expanded its military operations in southern Lebanon, raising concerns that regional tensions could broaden. In international markets, Brent oil futures for August delivery rose 2.13% to USD 93.06 per barrel, while West Texas Intermediate increased 2.61% to USD 89.64 per barrel. The gains mark a sharp reversal from last week, when oil prices tumbled about 10% amid reports that Washington and Tehran were discussing a framework agreement that could pave the way for a longer ceasefire.
The latest military actions highlighted the fragility of the weeks-long ceasefire and raised concerns that negotiations aimed at securing a broader agreement between Washington and Tehran could face fresh hurdles. According to The Hindu BusinessLine, Iran launched several ballistic missiles toward regional neighbours on June 2, though all failed to hit their intended targets. Two Iranian missiles fired at Kuwait fell short or broke apart enroute, and three missiles launched at Bahrain were immediately intercepted by US and Bahrain air defence forces. In response to what it described as attempted attacks, US forces carried out strikes on Iran's Qeshm Island, with the US Central Command reporting that US forces successfully defeated multiple Iranian ballistic missiles and drones, and conducted self-defence strikes on Qeshm Island. The confrontation has resulted in at least 773 people killed in Lebanon since the joint offensive by the United States and Israel against Iran began on March 2. Hezbollah's leader Naim Qassem said in a televised address that Israel would be 'surprised' on the battlefield and that the group has prepared itself for a 'long confrontation' with Israel. The UK Ministry of Defence reported that British forces shot down 'multiple drones' overnight using a counter-drone unit deployed in the Middle East, with Royal Air Force Eurofighter Typhoon and F-35 Lightning II jets flying missions to defend British interests across multiple countries.
Diplomatic efforts between Tehran and Washington remain stalled, with mixed signals on negotiations. As reported by The Economic Times, Iranian media reported on Tuesday that Tehran had not been in contact with Washington for several days, while U.S. President Donald Trump maintained that negotiations were continuing. Trump told CNBC he would not be concerned if the negotiations came to an end, but shortly afterward stated on social media that talks were still in progress. He also told ABC News that he expected an agreement to extend the ceasefire and reopen the Strait of Hormuz within the next week. The signals from both sides remain mixed, with Iran's Tasnim news agency reporting that indirect talks with Washington had been suspended. More than three months after the United States and Israel launched strikes on Iran, the conflict remains deadlocked, with a fragile ceasefire still in place.
Markets are closely watching whether negotiations between Washington and Tehran lead to meaningful progress or encounter further obstacles. According to The Economic Times, traders are particularly focused on comments regarding the Strait of Hormuz and on actual tanker movements through the strategically important waterway. Saudi Aramco Chief Executive Officer Amin Nasser warned that disruptions in the Strait of Hormuz could delay stability in global oil markets until 2027, stating that prolonged disruptions could impact nearly 100 million barrels of oil supply each week. Morgan Stanley said the oil market is currently engaged in "a race against time," cautioning that the factors which have so far limited a sharper rise in crude prices may begin to weaken if the Strait of Hormuz remains shut through June. The brokerage noted that stronger U.S. crude exports and softer Chinese demand have helped absorb part of the supply shock, but warned that a prolonged closure could tighten global supplies once again if disruptions continue beyond the point that the U.S. and China can offset. US Central Command began implementing the blockade of all maritime traffic entering and exiting Iranian ports on April 13, with US forces having disabled six commercial vessels and redirected 122 as the ceasefire with Iran continues.
Despite the recent rally, analysts remain cautious about the near-term outlook for oil prices. According to Reuters, Goldman Sachs believes that weaker-than-expected oil demand from China and Europe presents a significant downside risk to its fourth-quarter forecasts of $90 per barrel for Brent crude and $83 per barrel for WTI. However, potential supply disruptions in the Middle East could still drive oil prices higher. From a technical perspective, Ponmudi R, CEO of Enrich Money, noted that MCX crude oil closed below the ₹8,300 mark, extending its recent bearish momentum after retreating sharply from the week's high near ₹9,090. The correction reflects a significant unwinding of the geopolitical risk premium as markets increasingly price in the possibility of easing tensions in the Middle East. Immediate resistance is placed in the ₹8,380–₹8,480 zone, with a sustained move above this range potentially helping prices recover towards ₹8,550–₹8,700. On the downside, the week's low near ₹8,200 serves as an important immediate support level, while a decisive break below this support could accelerate downside momentum towards ₹7,800. Traders are now closely watching whether diplomatic channels can prevent further escalation, with any disruption to oil supplies likely to trigger fresh volatility across energy markets.
