Crude oil prices experienced a notable decline of 3.25%, settling at Rs 8,073. This drop can be attributed to the easing of geopolitical tensions, which has alleviated concerns regarding potential supply disruptions in the Middle East. Market sentiment showed signs of deterioration following the announcement from U.S. President Donald Trump regarding the cancellation of military strike plans against Iran, coupled with indications that negotiations were moving forward toward a potential peace agreement. Expectations surrounding a potential deal to reopen the Strait of Hormuz, a vital global oil transit route, have notably diminished the geopolitical risk premium that had bolstered prices in recent weeks.

Despite Iran’s assertion that a final agreement remains elusive, traders responded favourably to the potential for de-escalation. Fundamentally, the oil market encountered challenges due to a less favourable demand outlook. OPEC has revised its forecast for global oil demand growth in 2026, now estimating an increase of 970,000 barrels per day, down from the previous projection of 1.17 million barrels per day. This adjustment represents the second consecutive downward revision. Goldman Sachs has adjusted its average Brent crude forecast for 2027, lowering it to $80 per barrel from the previous $85. This revision is attributed to anticipated increases in supply alongside a decline in demand.

Additionally, Saudi Arabia’s crude shipments to China are anticipated to stay close to record lows in July as Chinese refiners persist in operating at diminished rates. On the supply side, data from the U.S. Energy Information Administration provided notable support, indicating that crude oil inventories decreased by 7.2 million barrels, significantly surpassing the anticipated 4 million-barrel draw. Stocks at the Cushing delivery hub experienced a decline, whereas refinery utilisation saw an increase to 95.3%. However, petrol inventories recorded a slight increase, which constrained optimistic sentiment.

Distillate inventories experienced a minor decrease during the reporting period. Technically, the market is experiencing long liquidation, as open interest has decreased by 9.19% while prices have declined. Crude oil exhibits immediate support at Rs 7,886, with subsequent support at Rs 7,699. Resistance is identified at Rs 8,284, and a consistent movement above this threshold may initiate additional advancements towards Rs 8,495.