Crude oil prices concluded the trading session with an increase of 1.99%, reaching Rs 9,717. This uptick was bolstered by apprehensions regarding potential disruptions to energy supplies from the Persian Gulf, particularly in light of a drone attack on a vital Saudi Arabian pipeline. Saudi Arabia’s Energy Ministry announced the closure of the pipeline as a precautionary measure, amid reports of Houthi forces capturing a strategic island and port city in the Red Sea, which has heightened concerns regarding regional shipping. Most shipping through the Strait of Hormuz has already been halted, while a planned meeting between Iran and several Gulf Arab countries was indefinitely postponed, further heightening geopolitical uncertainty.

In August, Russia’s oil production experienced a reduction of 160,000 barrels per day compared to July, bringing the total to 8.718 million bpd. This decline can be attributed to Ukrainian strikes on energy infrastructure, which have adversely affected output levels. Saudi Arabia’s crude production experienced a significant decline of 1.9 million barrels per day, reaching 6.238 million bpd in August, marking its lowest level since 1990. U.S. crude inventories experienced a decrease of 0.391 million barrels for the week ending September 4, falling short of the anticipated 1.6 million-barrel draw. Concurrently, Cushing stocks saw a reduction of 0.684 million barrels.

Refinery crude runs experienced an uptick of 90,000 barrels per day; however, petrol inventories saw a rise of 1.269 million barrels, while distillate stocks increased by 2.087 million barrels. Net U.S. crude imports increased by 1.12 million barrels per day. OPEC has revised its 2026 global oil demand growth forecast downwards to 380,000 barrels per day, representing the fifth consecutive reduction. Conversely, the organization has increased its demand growth forecast for 2027. The IEA cautioned that an extended conflict may postpone the restoration of typical supply flows from the Middle East until 2027, as diminishing inventories and constrained refining capacity heighten the likelihood of tighter markets.

Crude oil is currently experiencing short covering, as evidenced by a 9.05% decline in open interest to 15,964, alongside a price increase of Rs 190, suggesting the closure of short positions. Crude oil is presently encountering support around Rs 9,561, and a persistent breach beneath this threshold may result in a challenge of Rs 9,404. On the upside, resistance is positioned around Rs 9,959, and a decisive move above this threshold could bolster the recovery toward Rs 10,200.