Crude oil settled up 3.88% at Rs 9,167, as escalating tensions in the Middle East obscure the likelihood of a diplomatic resolution and heighten worries regarding potential extended disruptions to regional supply. Iran’s Supreme Leader’s military adviser cautioned that the conflict might extend from the Persian Gulf, Strait of Hormuz, and Red Sea into the Indian Ocean if additional attacks take place, thereby diminishing optimism regarding US-Iran negotiations. Iran’s President stated that Tehran is ready to re-engage in negotiations but will not yield to threats.

Bank of America has adjusted its forecast for Brent crude oil prices in the latter half of 2026, increasing it to $95 per barrel from a previous estimate of $83. This revision is attributed to ongoing geopolitical tensions, which the bank considers its base case scenario. Furthermore, it cautions that if disruptions continue into spring 2027, front-month Brent prices could exceed $150. Libya’s National Oil Corporation has indicated that it is experiencing daily losses of approximately 130,000 barrels following the shutdown of the Sharara-Zawiya pipeline. US crude inventories rose by 3 million barrels to 426.4 million barrels in the week ending September 18, contrary to expectations for a 641,000-barrel draw. Additionally, Cushing stocks increased by 2.3 million barrels to 23.7 million barrels.

Refinery crude runs experienced a decline of 519,000 barrels per day, accompanied by a reduction in utilisation of 2.8 percentage points, bringing it down to 94%. Petrol inventories decreased by 1.7 million barrels, bringing the total to 206 million barrels, whereas distillate stocks experienced a reduction of 0.4 million barrels, resulting in a total of 107.4 million barrels. The US Strategic Petroleum Reserve has decreased to 284.6 million barrels, marking its lowest level since October 1982, due to scheduled releases. OPEC has revised its 2026 global oil demand growth forecast down to 380,000 barrels per day, representing the fifth consecutive downward adjustment.

Meanwhile, the IEA has cautioned that diminishing inventories and limited refining capacity may exacerbate market tightness if disruptions in the Middle East continue into 2027. Crude oil is currently experiencing renewed buying activity, as evidenced by a 15.4% increase in open interest to 13,865, alongside a price increase of Rs 342. The market is identifying support around Rs 8,849, and a decline beneath this threshold may reveal Rs 8,530. On the upside, resistance is positioned around Rs 9,398, and a sustained movement above this threshold may result in a test of Rs 9,628.