Crude oil prices increased by 2.35% to close at Rs 6,705, bolstered by a resurgence of geopolitical tensions in the Middle East following reports of a ship being hit in the Strait of Hormuz. Sentiment also deteriorated following Iran’s declaration that peace negotiations with the United States would not recommence unless President Donald Trump retracted threats of renewed military action.

The Strait of Hormuz continues to serve as a pivotal conduit for global energy, historically managing close to one-fifth of international oil and LNG shipments. Despite geopolitical support, the long-term supply outlook continues to exhibit bearish tendencies. Societe Generale anticipates that the oil market will transition into a surplus in late 2026 and 2027, driven by production growth outpacing demand. Saudi Arabia is contemplating an expansion of its pipeline capacity to the Red Sea, coinciding with OPEC+’s decision to raise production by 188,000 barrels per day starting in August.

U.S. crude inventories experienced a decline of 3.775 million barrels; however, the increase in Cushing inventories and elevated distillate stocks tempered any optimism. Crude oil is currently experiencing short covering, evidenced by a 2.61% decline in open interest alongside an increase in prices. Immediate support is positioned at Rs 6,601, with subsequent support at Rs 6,497, while resistance is identified at Rs 6,766. A sustained move above this level could extend gains toward Rs 6,827.