Crude oil prices experienced a notable increase of 3.04%, closing at Rs 7,584. This rise was primarily influenced by heightened geopolitical tensions in the Middle East, which have rekindled apprehensions regarding global energy supplies. The United States has reinstated a naval blockade of Iran, as renewed hostilities between Washington and Tehran have heightened concerns regarding potential disruptions to crude shipments via the Strait of Hormuz, a crucial artery for global oil transportation. In light of supply risks, reports indicate that two tankers from the UAE were struck while navigating the waterway, while Saudi Arabia successfully intercepted missiles launched by Yemen’s Houthis, thereby heightening apprehensions regarding regional energy security.

Supply fundamentals continued to exhibit support as U.S. Strategic Petroleum Reserve inventories experienced a decline of approximately 3 million barrels, reaching 316.5 million barrels, marking the lowest level since April 1983. Since the escalation of the conflict involving Iran, SPR holdings have decreased by nearly 99 million barrels, while total U.S. crude inventories have reached their lowest point since 1984. Weekly EIA data indicated a reduction in commercial crude inventories by 3.775 million barrels, bringing the total to 408.3 million barrels. However, this draw fell short of market expectations. Petrol inventories experienced a significant decline, indicative of robust fuel demand, whereas distillate inventories saw an uptick and crude imports increased slightly.

Meanwhile, OPEC has adjusted its 2026 global oil demand growth forecast downward to 780,000 barrels per day for the third consecutive month, although it has increased its outlook for demand growth in 2027. OPEC+ has reached a consensus to elevate production targets by 188,000 barrels per day starting in August, continuing the trend of quota adjustments observed in preceding months. However, actual production continues to lag behind planned levels due to logistical disruptions associated with regional conflicts, even as export flows show signs of gradual improvement.

Crude oil is currently experiencing significant short covering, as evidenced by a 35.45% decline in open interest in conjunction with rising prices. Immediate support is observed at Rs 7,436, succeeded by Rs 7,288. Resistance is positioned at Rs 7,782, and a sustained movement above this threshold could lead to further gains toward Rs 7,980, suggesting that geopolitical developments will continue to be the primary influence on short-term price direction.