Crude oil price slumped over 11% to ₹8,588 per barrel in futures trade on Wednesday (May 6, 2026), tracking sharp losses in global benchmarks amid signs of a potential breakthrough between the U.S. and Iran.

On the Multi Commodity Exchange (MCX), crude for the May delivery plunged ₹1,110, or 11.45%, to ₹8,588 per barrel in a business turnover of 12,132 lots.

Similarly, the June contract also nosedived by ₹1,098, or 11.69%, to ₹8,298 per barrel in 4,274 lots.

Analysts said oil prices came under heavy pressure following reports that Washington and Tehran are nearing a preliminary agreement aimed at ending the conflict and paving the way for broader nuclear negotiations.

The proposed framework is said to include a moratorium on Iran’s nuclear enrichment in exchange for sanctions relief and the release of billions of dollars in frozen Iranian funds, along with easing restrictions on shipping through the Strait of Hormuz, according to reports.

In the international market, crude prices fell sharply, with Brent oil for the July contract plummeting $11.57, or 10.53%, to $98.30 per barrel, while West Texas Intermediate (WTI) declined by $12.39, or 12.11%, to $89.88 per barrel in New York.

Brokerage firm Kotak Securities said oil prices declined for the second straight session as geopolitical risk premium eased after U.S. President Donald Trump’s decision to temporarily pause Hormuz escort operations to allow negotiations to progress and confirmed that a ceasefire remains in place.

Meanwhile, U.S. Defence Secretary Pete Hegseth said the truce remained intact, while American military officials indicated recent regional flare-ups do not warrant escalation, further dampening oil prices.

Norbert Rucker, Head of Economics and Next Generation Research at Julius Baer, said: “The twists and turns continue. The U.S. called off the safeguarding of trade through Hormuz again, keeping uncertainty high, and transits are down to a trickle for the time being”.

Oil prices dropped below $100 per barrel despite the persistent gridlock, possibly for the simple fact that these latest twists triggered some hostilities but not a pronounced escalation, he added.

The rupee appreciated 61 paise to close at 94.57 (provisional) against the U.S. dollar on Wednesday (May 6, 2027), as Brent crude prices retreated from elevated levels towards $100 per barrel after U.S. President Donald Trump hinted at a possible deal with Iran.

Forex traders said that with the Indian rupee facing severe pressure, the Reserve Bank of India (RBI) is also actively pursuing a “non-direct” strategy to support the currency.

Moreover, market sentiment was boosted after Mr. Trump paused “Project Freedom,” a U.S. operation to escort ships through the Strait of Hormuz.

At the interbank foreign exchange market, the rupee opened at 95 against the U.S. dollar, then lost ground and touched an intraday low of 95.18. The rupee finally settled at 94.57 (provisional), registering a rise of 61 paise over its previous close.

On Tuesday (May 5), the rupee settled at 95.18 against the U.S. dollar, after witnessing an all-time intraday low of 95.44, on possible RBI intervention after investors retreated from riskier assets amid renewed clashes in the Gulf and targeting of UAE infrastructure, which reignited supply chain fears.

According to CR Forex Advisors MD Amit Pabari, the Reserve Bank of India is exploring ways to support the currency without directly using its forex reserves.

Mr. Pabari further noted that one of the ideas being discussed is to encourage state-run banks to raise funds through foreign currency bonds, which could help bring fresh dollar inflows into the system.

President Trump has suspended “Project Freedom” to escort ships through the Strait of Hormuz, claiming progress in negotiations with Iran toward an agreement to end the war.

In a post on Truth Social on Tuesday (May 5), Mr. Trump said, “Great progress has been made toward a complete and final agreement with representatives of Iran.”

Project Freedom was launched on Monday (May 4) to escort ships, stranded due to the closure of the Strait of Hormuz, out to safety. Mr. Trump had announced the operation on Sunday (May 3), and the U.S. Central Command began implementing it the next day.

“The global mood showed a slight pause, but not a complete sense of relief. U.S. President Donald Trump announced that “Project Freedom” will be temporarily paused to allow room for a possible agreement, which has helped cool some of the extreme uncertainty in the markets,” Mr. Pabari said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 97.79, down 0.66%.

Brent crude, the global oil benchmark, was trading lower by 8.25% at $100.81 per barrel in futures trade.

On the domestic equity market front, Sensex jumped 940.73 points to settle at 77,958.52, while the Nifty surged 298.15 points to 24,330.95.

Foreign Institutional Investors sold equities worth ₹3,621.58 crore on Tuesday (May 5), according to exchange data.

Meanwhile, India’s services sector growth climbed to a five-month high of 58.8 in April with new orders and output expanding at quicker rates, as firms indicated a shift from international to domestic suppliers amid the West Asia crisis, a monthly survey said on Wednesday (May 6).

The seasonally adjusted HSBC India Services PMI Business Activity Index rose from 57.5 in March to 58.8 in April, showing the strongest rate of expansion since last November.