Crude oil prices increased by 1.08%, closing at Rs 8,707, as rising geopolitical tensions in the Middle East heightened worries regarding global energy supplies. Market sentiment shifted to a bullish stance following Israel’s renewed strikes on Lebanon, despite the presence of an existing truce. This development has dampened optimism regarding a potential de-escalation of the broader regional conflict. The latest developments have also obscured the prospects for a U.S.-Iran peace agreement and postponed expectations for the reopening of the Strait of Hormuz, a vital corridor for global crude and natural gas shipments. Iran’s response to the attacks involved the launch of missiles directed at Israel, which has contributed to an increase in regional uncertainty.
Despite U.S. President Donald Trump’s call for restraint and indications of attempts to avert further retaliation, concerns regarding supply persisted and continued to bolster oil prices. Fundamental data also bolstered the market. U.S. crude inventories experienced a decline of 7.97 million barrels for the week ending May 29, representing the most substantial decrease since February and surpassing market forecasts of a 4 million barrel reduction. Crude stocks at the Cushing, Oklahoma delivery hub experienced a decline, alongside a reduction in net U.S. crude imports during the week.
However, gains were partially constrained by the accumulation of fuel inventories, as petrol stocks rose by 3.36 million barrels and distillate inventories increased by 1.50 million barrels. Meanwhile, OPEC+ has declared its fourth production increase in four months. However, analysts contend that the effect will be constrained, as numerous member nations are still grappling with production limitations stemming from geopolitical disruptions and infrastructure challenges. OPEC has revised its global oil demand growth forecast for 2026 downward to 1.17 million barrels per day, a decrease from the previous estimate of 1.38 million. This adjustment is attributed to the economic repercussions stemming from the conflict in Iran.
Technically, the market is experiencing short covering, as evidenced by a 7.73% decline in open interest to 9,755 contracts, coinciding with an increase in prices. Crude oil exhibits immediate support at Rs 8,532, with additional support identified at Rs 8,356. On the upside, resistance is positioned at Rs 9,007, and a sustained move above this level could lead to further gains toward Rs 9,306.