Crude oil prices concluded the trading session with a 5.11% increase, reaching Rs 7,803. This uptick was bolstered by a prevailing optimism regarding diplomatic initiatives that may lead to the reopening of the Strait of Hormuz. However, the extent of these gains was tempered by Iran’s stipulations for compensation, the removal of restrictions on its shipping activities, and additional prerequisites prior to the resumption of operations in this critical maritime corridor. Geopolitical risks have persisted at high levels following the assertion by Iran-backed Houthi militants of an assault on Saudi Arabia’s Jazan refinery.

Additionally, an Abu Dhabi National Oil Company tanker was targeted in the Strait of Hormuz. The CFTC reported a decline in speculative net-long positions in WTI crude by 4,683 contracts, bringing the total to 101,824 contracts for the week ended August 4. This suggests a reduction in bullish positioning among traders. China’s July crude oil imports decreased by 24.3% compared to the same month last year, totalling 35.73 million tonnes. For the period from January to July, imports also saw a decline of 13.2%, amounting to 283.33 million tonnes, indicating a trend of weaker demand.

U.S. crude inventories saw an unanticipated rise of 2.479 million barrels, reaching a total of 407 million barrels, alongside a 2.356 million barrel increase in Cushing stocks. However, petrol inventories declined by 1.643 million barrels, while distillate stocks fell by 3.473 million barrels, offering some underlying support. OPEC+ has sanctioned a production quota augmentation of approximately 188,000 barrels per day starting in September, thereby finalising the gradual retraction of a voluntary supply reduction amounting to 1.65 million barrels per day.

From a technical perspective, the market is experiencing new buying activity, as evidenced by a 0.53% increase in open interest to 8,946 contracts, alongside a price increase of Rs 379. Crude oil is currently encountering support at Rs Rs 7,536, and a decline beneath this threshold may reveal Rs 7,270. On the upside, resistance is positioned at Rs 7,944; a sustained move above this level could catalyse additional gains toward Rs 8,086.