Crude oil prices concluded the trading session with a slight increase, rising by 0.01% to reach Rs 7,614. This uptick was driven by escalating geopolitical tensions in the Middle East, which counterbalanced worries regarding the growing global supply. Market sentiment remained buoyed following reports that Iran has encouraged Yemen’s Houthis to brace for possible disruptions in the Bab el-Mandeb Strait, should the U.S. take action against Iranian power infrastructure. Reduced vessel traffic through the Red Sea, following the reimposition of the U.S. naval blockade on Iran, has heightened fears of supply disruptions across key energy shipping routes.
On the supply front, Iraqi crude exports surged to an average of 1.2 million barrels per day during the first half of July, more than doubling previous figures, while OPEC+ sanctioned an additional production quota increase of 188,000 barrels per day effective from August. Despite the group’s announcements of cumulative production increases since April, actual output continues to be limited by regional conflicts and interruptions in tanker movements. Meanwhile, OPEC has revised its 2026 global oil demand growth forecast downward to 780,000 barrels per day, representing the third consecutive adjustment in this direction, while still holding a more optimistic perspective compared to the International Energy Agency.
The inventory data from the U.S. revealed a nuanced landscape. Commercial crude inventories decreased by 1.693 million barrels, albeit the reduction fell short of market anticipations. Petrol stocks decreased by 1.533 million barrels, indicating robust fuel demand, whereas distillate inventories rose by 4.556 million barrels. Crude stocks at Cushing increased by 0.43 million barrels, while refinery runs saw a slight uptick. The Strategic Petroleum Reserve decreased by roughly 3 million barrels to 316.5 million barrels, marking the lowest level since 1983, while total U.S. crude inventories fell to their lowest point since 1984.
Crude oil is currently experiencing short covering, as evidenced by a decline in open interest of 11.09% while prices remain stable. This suggests a potential unwinding of bearish positions. Immediate support is identified at Rs 7,538, with subsequent support at Rs 7,463. Resistance levels are established at Rs 7,744 and Rs 7,875. A sustained move above resistance could bolster bullish momentum, while a failure to maintain support may instigate renewed selling pressure.