Crude oil prices experienced a significant decline of 4.31%, settling at Rs 8,842. This drop can be attributed to the easing of geopolitical tensions, which alleviated concerns over supply disruptions and prompted widespread profit-taking activities. Market sentiment improved following a ceasefire agreement between Israel and Lebanon, which has raised expectations for a broader diplomatic resolution that may include Iran. Expectations surrounding advancements in U.S.-Iran negotiations, along with the potential for reopening the Strait of Hormuz—a vital conduit for global oil transportation—significantly influenced crude prices and diminished the geopolitical risk premium that had bolstered the market in recent weeks.

Fundamentally, the market remained influenced by a combination of mixed supply and demand signals. Russian Deputy Prime Minister Alexander Novak recognised that Russia’s oil production has experienced a decrease since the beginning of the year, attributed to unanticipated maintenance activities at refineries. Novak underscored the increasing uncertainty surrounding global oil demand following dialogues with Saudi Arabia, mirroring apprehensions about the economic ramifications of recent geopolitical events. Meanwhile, OPEC has revised its global oil demand growth forecast for 2026 down to 1.17 million barrels per day from the previous estimate of 1.38 million barrels, attributing this adjustment to weaker consumption expectations. However, the organization has increased its outlook for demand growth in 2027.

In the United States, crude inventories experienced a decline of 7.97 million barrels, a figure that notably surpassed market expectations and represented the most substantial draw since February. Stocks at the Cushing delivery hub experienced a decline, coinciding with a reduction in net crude imports during the week. Nonetheless, the positive inventory data was counterbalanced by a significant rise in petrol and distillate inventories, indicating a decline in fuel demand. Additionally, the Strategic Petroleum Reserve has experienced a decline for the tenth consecutive week, reaching its lowest level since January 2024.

Technically, the market is experiencing long liquidation, as open interest has decreased by 22.25% to 10,070 contracts, coinciding with a significant decline in prices. Crude oil exhibits immediate support at Rs 8,709, with a breach of this threshold likely to challenge the Rs 8,575 mark. Resistance is identified at Rs 9,078, and a breach of this threshold may lead to further advancements toward Rs 9,313.