Crude Oil Rallies Amid Geopolitical Tensions and US Inventory Decline
Crude oil prices surged on Wednesday following renewed US strikes against Iran and fresh Israeli threats against Tehran, fueling concerns about potential disruptions to Middle East oil supplies. The Strait of Hormuz saw only six commodity vessels cross through on Wednesday, down from 11 a day earlier and below the 10-day average of around 13, highlighting elevated shipping risks.
Iraq's oil exports increased significantly in August, reaching around 2.34 million barrels per day, supported by heavy discounts and approvals for Iraqi tankers to transit Hormuz. Russia also expects to restore its remaining 10% of refining capacity affected by Ukrainian drone attacks.
The Organization of the Petroleum Exporting Countries (OPEC) is likely to maintain its October output policy unchanged as it completes the unwinding of one layer of production cuts and shifts focus toward 2027 quotas. Meanwhile, US oil inventories declined by 4.45 million barrels in the final week of August, significantly larger than expectations for a 1.1 million-barrel draw.
Technically, crude oil is witnessing fresh buying as open interest increased 14.15% to 17,091 while prices gained Rs 42, indicating strong participation behind the upward move. Prices are holding above immediate support at 8467, and sustained trade above this level could keep the bullish bias intact.