Global crude oil prices retreated on Tuesday, 2 June, reversing part of the previous session's sharp rally, as traders continued to grapple with conflicting signals over US-Iran negotiations. The pullback underscores how sensitive energy markets remain to geopolitical developments in the Middle East.

Benchmark Prices at a Glance

International benchmark Brent crude was trading around 1 per cent lower at $94.04 per barrel, while US West Texas Intermediate (WTI) crude declined more than 1 per cent to $91.14 per barrel. In the domestic market, crude oil futures for June delivery on the Multi Commodity Exchange (MCX) were quoted at ₹8,708, down ₹28 or 0.32 per cent, having touched an intraday high of ₹8,751 and a low of ₹8,690 by 10:30 am IST.

What Drove the Previous Session's Surge

Both Brent and WTI had surged approximately 5 per cent in the prior session before trimming gains, as markets weighed sharply contradictory signals from Washington and Tehran. US President Donald Trump stated he had not been informed that Iran had suspended talks with Washington and maintained that discussions were ongoing. However, separate reports suggested that Tehran had halted indirect negotiations with the US — a direct contradiction that left traders unable to price risk cleanly.

Hormuz, Hezbollah, and Conflicting Signals

Trump further said he expected an agreement to extend the ceasefire and reopen the Strait of Hormuz within the next week, while also remarking that he would not mind if negotiations collapsed entirely. The remarks added another layer of uncertainty to an already volatile situation. Separately, Lebanon announced a partial ceasefire between Hezbollah and Israel, a development that offered limited relief to risk sentiment given the broader regional tensions. This is at least the third major oil-price swing this month directly linked to Middle East diplomatic signals.

Indian Markets Feel the Heat

The geopolitical turbulence spilled into Indian financial markets. The Indian rupee opened at 95.05 against the US dollar, marginally weaker than Monday's close of 95.00. Domestic equity benchmarks also opened in the red, with the Sensex starting the session at 73,945.20, down 322 points or 0.43 per cent, while the Nifty opened at 23,229.15, lower by 153.45 points or 0.65 per cent. Concerns over a weak monsoon forecast compounded the selling pressure, adding a domestic dimension to the global risk-off mood.

Asian Markets Show a Mixed Picture

Across Asia, equities presented a divided front. Japan's Nikkei slid 2 per cent and South Korea's KOSPI slipped nearly 3 per cent, reflecting broader risk aversion. Hong Kong's Hang Seng, however, bucked the trend and was trading approximately 1 per cent higher, suggesting selective buying in Chinese-linked assets despite the wider caution.

With US-Iran talks in an ambiguous state and the Strait of Hormuz's status unresolved, oil markets are likely to remain volatile until a clearer diplomatic picture emerges.