Crude oil yesterday settled sharply higher by 3.9% at Rs 9,376, driven by escalating geopolitical tensions in the Middle East that heightened concerns regarding potential disruptions to global supply. Market sentiment shifted to a bullish stance following US President Donald Trump’s characterization of Iran’s reaction to a US-supported peace proposal as “unacceptable,” thereby diminishing expectations for a swift resolution to the persistent conflict. Supply concerns have escalated due to the continued closure of the Strait of Hormuz, which has resulted in a constrained global crude market and heightened anxieties regarding potential disruptions to a vital energy shipping corridor.

Attention is now directed towards President Trump’s forthcoming visit to Beijing, where dialogues with Chinese President Xi Jinping are anticipated to encompass Iran and wider geopolitical dynamics. Saudi Arabia’s crude exports to China are anticipated to decrease further in June, as Chinese refiners have lowered their purchase nominations in response to high oil prices associated with the ongoing conflict and constrained regional supplies. Shipping risks continued to be high, as Kpler data indicated that multiple crude tankers departing the Strait of Hormuz had disabled their tracking systems to evade possible Iranian assaults. Further backing was provided by the contraction in US inventory figures. During the week ended May 1, US crude oil inventories experienced a decline of 2.314 million barrels, bringing the total to 457.2 million barrels.

Concurrently, gasoline inventories decreased by 2.504 million barrels, and distillate stocks saw a reduction of 1.294 million barrels. Crude stocks at the Cushing, Oklahoma hub experienced a reduction of 648,000 barrels. Despite a modest decline in refinery activity, the persistent reduction in fuel inventories has sustained a positive outlook in the market. Analysts project that Brent crude prices will sustain levels exceeding $90 per barrel until 2026, driven by ongoing supply concerns and a gradual process of inventory rebuilding. Meanwhile, OPEC has adjusted its global oil demand forecast for the second quarter downward by 500,000 barrels per day, attributing this revision to the effects of tensions in the Middle East.

However, it has kept its full-year demand growth outlook unchanged. From a technical perspective, the market is experiencing renewed buying interest, evidenced by a 3.67% increase in open interest, which settled at 10,829, alongside a price gain of Rs 352. Crude oil is currently finding support at Rs 9,168; a decline below this level could lead to a test of Rs 8,961. Conversely, resistance is identified at Rs 9,572, with a potential upward movement likely to challenge Rs 9,769.