Crude Oil Prices Rise Amid Ongoing US-Iran Diplomatic Standoff

US-Iran Tensions Send Oil Prices Soaring

Oil prices gained on Wednesday, 3 June, amid growing doubts over the likelihood of a peace agreement between the US and Iran, while renewed hostilities in the Middle East further heightened supply concerns. Brent crude futures climbed toward $97 per barrel, while West Texas Intermediate (WTI) hovered near $95, after gaining more than 7% during the first two trading days of the week.

The Multi Commodity Exchange (MCX) also witnessed a similar upward movement, tracking global prices. MCX crude oil price rose as much as 1% to ₹9,039 per barrel. This increase can be attributed to the ongoing conflict in the Middle East, which has cast uncertainty over delicate diplomatic efforts between Washington and Tehran.

The situation in the Middle East remains volatile, with Israel continuing its strikes on Lebanon, casting uncertainty over the prolonged diplomatic efforts between Washington and Tehran. Iran launched missiles toward neighboring countries, including Kuwait and Bahrain, although the projectiles either broke apart mid-flight or were intercepted. Meanwhile, US forces carried out strikes on Iran's Qeshm Island, according to a statement from the US Central Command.

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The uncertainty surrounding a possible extension of the current ceasefire and the resumption of shipments through the Strait of Hormuz has fueled volatility in oil markets. Prices, which declined last month on hopes of a diplomatic breakthrough, are now facing renewed pressure as delays raise concerns that global crude stockpiles may need to be drawn down further while Persian Gulf exports remain constrained.

According to an ABC News report, US President Donald Trump is seeking written commitments from Iran on specific nuclear concessions as part of a preliminary agreement aimed at ending the conflict. The report added that Tehran had previously provided verbal assurances regarding certain aspects of its nuclear program.

Analysts believe that the current situation will have a significant impact on crude oil prices. Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, believes that the Brent oil price could reach the $70s if a credible US-Iran deal is reached, while a hardened deadlock or a Red Sea flare-up could push it past $130 as inventories run low through the summer.

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On the technical outlook, Ponmudi R, CEO of Enrich Money, said that MCX crude oil price is trading above the ₹8,500 level, staging a technical bounce near the lower end of the ascending trendline structure that continues to provide structural support. Immediate resistance stands at ₹8,625-₹8,650, while a break below the ₹8,450-₹8,390 area could extend the decline toward ₹8,300-₹8,250.