Global crude oil prices fell nearly 1 per cent for a second consecutive session on Wednesday after US President Donald Trump reiterated that the conflict with Iran could end "very quickly", raising hopes of a possible diplomatic breakthrough. International benchmark Brent crude futures slipped 0.9 per cent or nearly $1 to $110.28 per barrel, while US West Texas Intermediate (WTI) crude futures declined about 1 per cent or $1.03 to $103.12 per barrel. Both benchmarks had already fallen nearly $1 in the previous session following signs of progress in talks between Washington and Tehran.
According to experts, the near-term bias in oil prices remains cautiously bullish amid ongoing developments in West Asia. However, markets remained cautious due to uncertainty surrounding peace negotiations and continuing disruptions to oil supplies from the region. Investors are closely monitoring whether the US and Iran can reach common ground and secure a lasting peace deal, especially as Washington's stance has appeared inconsistent in recent days.
Speaking at the annual Congressional Picnic, Trump said the conflict with Iran would end "very quickly" and that Tehran wanted "to make a deal so badly". He also predicted a sharp decline in global crude oil prices, citing abundant supply in the market. "There's so much oil out there, prices are going to fall sharply," Trump said, while reiterating that the conflict would be resolved soon.
Meanwhile, global brokerage Citigroup expects Brent crude prices to climb to $120 per barrel in the near term. Morgan Stanley described the oil market as being in "a race against time", warning that the factors currently limiting price gains could weaken if the Strait of Hormuz remains shut into June. The brokerage noted that higher US crude exports and softer Chinese imports have helped cushion the market from a deeper supply shock so far.
Amid the volatility, the Indian rupee depreciated 20 paise to an all-time low of 96.90 against the US dollar in early trade on Wednesday, weighed down by a strong dollar and elevated crude oil prices amid simmering Iran-US tensions. Forex traders said FII outflows and weakness in domestic equities also pressured the rupee.
At the interbank foreign exchange market, the rupee opened at 96.89 against the US dollar before slipping further to 96.90, marking its eighth consecutive session of decline. On Tuesday, the rupee had closed 50 paise lower at a record low of 96.70.
Meanwhile, the dollar index was trading at 99.262, up 0.01 per cent. Brent crude was later seen trading 0.35 per cent lower at $110.59 per barrel in futures trade.
On the domestic equity market front, Sensex tanked 517.11 points to 74,667.51 in early trade, while Nifty dropped 152.45 points to 23,475.80. Foreign Institutional Investors turned net sellers after three sessions of buying and offloaded equities worth Rs 2,457.49 crore on Tuesday, according to exchange data.
