Crude oil futures staged a strong rebound on Monday, climbing 3% to Rs 8,536 per barrel on the Multi Commodity Exchange (MCX), driven by renewed geopolitical tensions between the United States and Iran. The recovery ended a three-day losing streak for the commodity.
Price Movement
The most-traded June contract surged by Rs 255, or 3.08%, to settle at Rs 8,536 per barrel, with trading volumes reaching 10,943 lots. This marked a significant turnaround after consecutive sessions of decline.
Geopolitical Factors
Market analysts attributed the price spike to escalating US-Iran tensions, which raised concerns about potential supply disruptions in the Middle East. The region accounts for a substantial portion of global oil production, and any conflict could impact crude flows.
Investors remained cautious as diplomatic rhetoric between the two nations intensified over the weekend. While no immediate supply outages were reported, the market priced in a risk premium amid uncertainty.
Technical Outlook
From a technical perspective, crude oil found strong support near the Rs 8,200 level, leading to a sharp bounce. Resistance is now seen at Rs 8,650, and a sustained move above this level could open the door for further gains.
- Immediate support: Rs 8,400 per barrel
- Key resistance: Rs 8,700 per barrel
- Next target: Rs 8,800 per barrel
Market Sentiment
Overall market sentiment remained volatile, with traders closely watching geopolitical developments and inventory data. The rebound also aligned with a slight recovery in global equity markets, which improved risk appetite.
Analysts noted that while the short-term outlook is bullish due to geopolitical factors, underlying demand concerns and potential easing of tensions could cap upside. The Organization of the Petroleum Exporting Countries (OPEC) and its allies are scheduled to meet next month, adding another layer of uncertainty.
Conclusion
Crude oil futures have regained momentum amid renewed US-Iran tensions, but sustainability of the rally depends on further escalation or supply disruptions. Investors are advised to monitor geopolitical cues and technical levels for trading decisions.
