Crude oil prices surged by 5.49% to settle at Rs 8,736, marking a robust recovery primarily influenced by rising geopolitical tensions in the Middle East. Market sentiment shifted markedly towards optimism following reports that Iran halted communications and message exchanges with the United States as a reaction to Israel’s escalating military actions in Lebanon. The development intensified concerns regarding potential supply disruptions from the region, leading to aggressive purchasing across energy markets. On the supply side, U.S. crude oil production held steady at 13.7 million barrels per day in March, as reported by the Energy Information Administration. Production in Texas has decreased to a four-month low of 5.78 million barrels per day, whereas output in New Mexico has remained stable.

Meanwhile, Kazakhstan has successfully reinstated production levels at the Tengiz oilfield, resulting in national output returning to around 290,000 metric tonnes per day. Despite the recovery in Kazakh supplies, geopolitical risks remained the primary influence on market direction. Inventory data offered further validation to price levels. U.S. crude stockpiles experienced a decrease of 3.327 million barrels, with inventories at the Cushing, Oklahoma delivery hub reflecting their most significant decline since August 2023. Petrol and distillate inventories experienced notable reductions, indicative of robust fuel demand and enhanced refinery operations.

However, money managers reduced their net long crude positions, indicating a degree of caution concerning the sustainability of the rally. OPEC has revised its global oil demand growth forecast for 2026, now projecting an increase of 1.17 million barrels per day, down from the earlier estimate of 1.38 million. This adjustment is attributed to diminished consumption expectations in light of the ongoing conflict in Iran. Goldman Sachs has indicated that subdued demand from China and Europe poses a downside risk to oil prices, although potential disruptions to Middle Eastern supplies could still provide support for the market.

Technically, the market is experiencing short covering, as evidenced by a 23.97% decline in open interest to 9,423 contracts, coinciding with a significant increase in prices. Crude oil exhibits immediate support at Rs 8,478, with additional support identified at Rs 8,220. On the upside, resistance is observed at Rs 9,010, and a breakout above this level could propel prices toward Rs 9,284.