Crude oil prices experienced a modest increase, closing up by 0.84% at Rs 5,980, largely driven by escalating geopolitical risk premiums. Tensions in the Middle East escalated following the U.S. enhancement of its military presence, accompanied by President Donald Trump’s admonition to Iran to either comply with a nuclear agreement or confront potential military repercussions. Markets exhibit heightened sensitivity to potential disruption risks surrounding the Strait of Hormuz, a critical chokepoint for global crude and LNG shipments.

Geopolitical tensions in Venezuela, production disruptions in Kazakhstan, U.S. production halts caused by extreme winter conditions, and stricter U.S. regulations on Russian oil imports contributed to the additional support. The International Energy Agency has adjusted its 2026 global oil demand growth forecast upwards, now estimating an increase of 930,000 bpd. Concurrently, it has reduced supply growth projections, indicating a tighter surplus in the market.

The U.S. EIA anticipates a decline in U.S. crude production following its peak in 2025. Concurrently, weekly inventory data revealed a more significant draw in U.S. crude stocks than anticipated, with reductions noted at the Cushing hub, which further bolsters price support. Meanwhile, OPEC+ upheld its forecast for robust demand growth, even in the face of slightly increased production levels in November.

From a technical perspective, the market is experiencing short covering, evidenced by a 13.56% decline in open interest in conjunction with increasing prices. Crude oil is currently positioned with support at Rs 5,917, while additional declines are anticipated toward Rs 5,853. On the upside, resistance is positioned at Rs 6,066, and a breakout above this level could pave the way toward Rs 6,151.