Crude oil prices surged by 2.89% to close at Rs 9,258, propelled by increasing geopolitical tensions and heightened worries regarding potential supply disruptions in the Middle East. The declaration of force majeure by Iraq concerning oilfields managed by foreign companies, coupled with the escalation of U.S. military presence in the area, has intensified concerns regarding potential extended supply limitations.

The scenario is further complicated by risks to shipping through the Strait of Hormuz, although several global economies have intervened to ensure safe passage. The International Energy Agency has indicated that the restoration of disrupted oil and gas flows may require as much as six months, implying that markets might be underappreciating the gravity of the circumstances.

Notwithstanding this, an anticipated supply-side alleviation is on the horizon as strategic reserves are being utilized, with a considerable global release scheduled. In the interim, U.S. crude inventories experienced a significant uptick of 6.16 million barrels, representing the fourth consecutive weekly rise, despite a decrease in gasoline and distillate stocks, which suggests a consistent demand trend. On the production front, Russia’s output experienced a minor decline, whereas Kazakhstan indicated a significant rebound in production levels. Refinery activity in the U.S. has shown signs of improvement, as utilisation rates have increased.

From a technical perspective, the market is experiencing short covering, as evidenced by a 12.88% decrease in open interest to 16,574, coinciding with a price increase of Rs 260. Immediate support is identified at Rs 8,911, with additional downside potential extending to Rs 8,563. Resistance is established at Rs 9,448, and an upward movement beyond this threshold may drive prices toward Rs 9,637.