Crude to extend gains as supply concerns outweigh relief: analysts
Brent settled at $109.86 after touching $110; Indian crude futures rose 6.4% on the week. Analysts see further gains on supply concerns, not relief.
Analysts expect crude oil to extend its advance next week, with supply concerns in West Asia and stalled US-Iran talks outweighing relief measures announced to ease shortages.
The market enters the week after Brent touched $110 a barrel on Friday and WTI settled near $99. Relief measures exist. G7 stock releases and a US-Russia diesel deal have raised hopes of improved supplies. Plans to ease sanctions on Moscow's shadow fleet were part of that effort. None has produced a sustained decline, according to Navneet Damani, Head of Research for Commodities at Motilal Oswal Financial Services.
Damani said crude's muted reaction to the string of bearish headlines shows a market driven by physical supply constraints rather than policy optimism. Logistical bottlenecks and an uneven recovery in supply keep availability tight. September's increase in West Asian exports came largely from Saudi Arabia. Vessel attacks and Houthi threats leave regional flows exposed, and limited capacity on alternative routes restricts any re-routing, he said.
Damani framed the relief measures as insufficient so far. A sustained decline, he said, would require those measures to show up as actual barrels reaching the market, not just as policy announcements.
The next read comes from weekly inventory data. Traders will watch API crude stocks, Cushing inventories, total US oil stocks, and crude imports for signals on the supply-demand balance.
US inventories already fell by 8 million barrels, and delayed Chinese crude arrivals have added to supply concern, Damani said. The International Energy Agency has warned of prolonged diesel tightness, raising concern about refined-product availability. Both the IEA and the US Energy Information Administration project a broader recovery in supplies only in 2027; the forecast depends on production gains and secure export routes.
Religare Broking's Ajit Mishra, SVP of Research, said his outlook remains positive. Price moves, he said, will be driven by geopolitical developments and actual supply disruptions rather than headlines alone. A further escalation in West Asia, or damage to energy facilities, could push Brent toward $115 to $120 per barrel, Mishra said.
Last week's settlement numbers show the scale of the move. On the Multi Commodity Exchange, November crude futures closed at ₹9,394 per barrel, up ₹566, or 6.4%. Brent for December delivery settled at $109.86, up $5.14, or nearly 5%, after touching $110 on Friday. West Texas Intermediate for the same month settled at $99.02, up $8.01, or nearly 9%.
The Strait of Hormuz remains the central uncertainty. Any disruption to shipments through the waterway would tighten global supplies further, the analysts said.
On the policy side, President Donald Trump's executive order waiving sanctions and tariffs on Russia and Iran has given temporary relief to major buyers of Russian oil, including India. Damani said the order does not remove the threat of disruption if attacks on Russian energy infrastructure hit production or exports.
The domestic commodities market will be closed during the morning session Tuesday for Dussehra.
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