Crude oil concluded the trading session with an increase of 0.85%, reaching Rs 7,964, as market participants observed the diplomatic negotiations between Iran and Oman regarding the Strait of Hormuz while evaluating the mixed signals from US inventory data. Technical discussions between Iran and Oman are anticipated to persist regarding the establishment of a permanent maritime corridor. This corridor will encompass the administration of the strait, information sharing, traffic management, as well as maritime and security services. Pakistan’s army chief also travelled to Tehran to bolster diplomatic initiatives, while Qatar maintained its role in mediation. Oil prices continued to face downward pressure throughout the week, as Washington’s recent actions regarding Iran were perceived as less stringent than anticipated.

The US refrained from implementing secondary sanctions on Iranian trading partners. US crude inventories presented a dichotomy in their readings, with one dataset revealing an increase of 4.2 million barrels for the week ending August 21, surpassing expectations of 1.9 million barrels. In contrast, EIA data indicated a modest rise of 95,000 barrels, bringing the total to 428.9 million barrels, which fell short of the anticipated 597,000-barrel increase. Cushing inventories saw an increase of 1.2 million barrels, while refinery utilisation experienced a rise of 0.2 percentage points, reaching 97.4%. Petrol inventories decreased by 2.5 million barrels, bringing the total to 206.8 million barrels, whereas distillate stocks saw a reduction of 2.2 million barrels, resulting in a total of 103.4 million barrels.

US crude production rose to 13.83 million barrels per day, an increase from 13.805 million barrels per day, reflecting a year-on-year rise of 503,000 barrels per day. In contrast, net crude imports saw a decline of 161,000 barrels per day. Commercial crude inventories, excluding the Strategic Petroleum Reserve, have experienced a reduction exceeding 45 million barrels over the last 19 weeks. Nevertheless, current stocks are still 5.8 million barrels above year-to-date levels. OPEC has revised its 2026 global oil demand growth forecast downwards to 580,000 barrels per day, representing the fourth consecutive reduction. Conversely, it has increased its growth projection for 2027.

Technically, the market is experiencing new buying activity, as evidenced by a 5.95% increase in open interest to 10,438, alongside a price increase of Rs 67, suggesting a resurgence of bullish participation. Crude oil is currently experiencing support at Rs 7,779. A sustained breach below this threshold may lead to a decline in prices toward Rs 7,593. On the upside, resistance is positioned at Rs 8,094, and a decisive move above this level could lead to an extension of gains toward Rs 8,223.