Crude oil prices experienced a significant decline of 4.65%, settling at Rs 8,604, as traders engaged in profit-taking following the recent rally influenced by geopolitical tensions. Despite the correction, the market exhibited significant volatility as the ongoing conflict involving the U.S., Israel, and Iran persisted, posing a threat to global energy supplies. The U.S. executed a thirteenth consecutive day of strikes on Iran, as President Donald Trump issued a warning of “major military punishment” directed at Iran and the Houthis in response to attacks on Saudi oil tankers in the Red Sea.
The disruption has heightened apprehensions regarding shipping through the Strait of Hormuz, leading Asian buyers to investigate alternative routes via the Suez Canal and around Africa. Furthermore, the halt in crude loadings at the Caspian Pipeline Consortium’s Black Sea terminal has interrupted a considerable share of Kazakhstan’s oil exports, thereby constraining regional supply. On the supply side, U.S. crude inventories rose by 2.01 million barrels, contrary to expectations of a draw, while petrol and distillate inventories also experienced increases, suggesting a decline in near-term fuel demand. Net U.S. crude imports increased during the week, contributing to inventory pressure.
Meanwhile, OPEC+ has reached an agreement to increase production targets by an additional 188,000 barrels per day starting in August, thereby continuing its methodical approach to restoring supply. However, actual production remains below pre-war levels as logistical disruptions in the Strait of Hormuz persistently constrain exports. Goldman Sachs has upheld its projection for Brent crude at $80 per barrel for the fourth quarter of 2026, anticipating a reduction in geopolitical risks as the year progresses, while also noting that subdued demand from Asia will constrain any potential increases.
Crude oil is currently experiencing long liquidation, as evidenced by a 16.9% decrease in open interest in conjunction with declining prices. Immediate support is positioned at Rs 8,408, succeeded by Rs 8,212. Resistance is identified at Rs 8,875, and a breakthrough above this threshold may lead to further gains towards Rs 9,146, although heightened near-term volatility is anticipated.