Crude oil settled sharply lower by 3.66% at Rs 7,837, as intensified U.S. economic pressure on Iran and its trading partners heightened uncertainty regarding the timing of a potential resolution to the conflict and the reopening of the Strait of Hormuz. U.S. Treasury Secretary Scott Bessent announced sanctions aimed at countries that persist in conducting business with Iran, while President Donald Trump signalled that nations would encounter a deadline to cut ties with Tehran or face unilateral penalties. Despite the decline, geopolitical risks continue to be heightened following reports of an oil tanker being struck near Oman, alongside claims from Houthi militants regarding an attack on a Saudi supertanker in the Red Sea.

Morgan Stanley anticipates a sustained recovery in Middle East supply, projecting Brent prices to reach $90 per barrel in the third quarter of 2026, increasing to $100 in the fourth quarter, before declining to $95 in the first quarter of 2027 and settling at $90 in the second quarter of 2027. Saudi crude exports rose to 3.993 million barrels per day in June, up from 3.434 million bpd in May, as reported by JODI data. Meanwhile, U.S. crude inventories increased by 4.4 million barrels, reaching a total of 428.8 million barrels, whereas Cushing stocks experienced a decrease of 1.3 million barrels.

Petrol inventories rose by 0.7 million barrels, reaching a total of 209.4 million barrels, while distillate stocks decreased by 1.5 million barrels, bringing the total down to 105.6 million barrels. Refinery runs experienced an increase of 216,000 barrels per day, accompanied by a one percentage point rise in utilisation. The CFTC reported a 23% increase in net long oil positions, reaching 122.1K contracts, which suggests a more robust bullish sentiment in the market. OPEC has revised its 2026 oil demand growth forecast downward to 580,000 bpd, representing the fourth consecutive reduction. However, it has increased its growth outlook for 2027.

Crude oil is currently experiencing a phase of long liquidation, evidenced by a 3.3% decrease in open interest, which now stands at 11,320, alongside a price decline of Rs 298. Immediate support is positioned at Rs 7,681, succeeded by Rs 7,525, whereas resistance is identified at Rs 8,094 and Rs 8,351. A sustained break below Rs 7,681 could extend the correction toward Rs 7,525, while a move above Rs 8,094 may revive buying interest toward Rs 8,351.