Crude oil futures witnessed a marginal uptick on Wednesday morning, fueled by the escalating tensions between Russia and Ukraine and the unfolding developments in the West Asian region. These geopolitical factors have heightened concerns over potential supply disruptions, driving up prices in the global oil market.
As of 9:52 am on Wednesday, August Brent oil futures were trading at USD 85.34, up by a slight 0.01 percent, while August crude oil futures on WTI (West Texas Intermediate) stood at USD 80.73, registering a modest 0.02 percent increase.
On the domestic front, July crude oil futures on the Multi Commodity Exchange (MCX) traded at Rs 6,734 during the initial hour of trading on Wednesday morning, up by 0.48 percent from the previous close of Rs 6,702. August futures also witnessed an upward movement, trading at Rs 6,710, reflecting a 0.64 percent increase compared to the previous close of Rs 6,667.
The upward momentum in global crude oil prices can be attributed to a significant incident reported on Tuesday – a large fire broke out in a fuel tank at an oil terminal in Russia’s southern port of Azov.
According to Russian officials and a Ukrainian intelligence source cited in a Reuters report, the fire was allegedly caused by a Ukrainian drone strike. The Azov port, home to two oil product terminals, handled around 2,20,000 tonnes of fuel for export from January to May.
In another development on Tuesday, the Israeli Foreign Minister, Israel Katz, warned of an impending decision regarding an all-out war with Lebanon’s Hezbollah, further escalating tensions in the region. Concurrently, the United States dispatched its envoy, Amos Hochstein, to Lebanon in an effort to defuse the mounting tensions. This move followed an increase in cross-border fire along Lebanon’s southern frontier, with media reports suggesting that Hezbollah has hinted at the possibility of attacking Israel’s Haifa city.
These unfolding events in key crude oil-producing regions have amplified concerns in the market over potential supply disruptions, contributing to the upward pressure on global oil prices.
On the inventory front, the weekly petroleum status data released by the industry body American Petroleum Institute (API) revealed an increase in crude oil inventories in the United States. According to the API, crude oil inventories rose by 2.26 million barrels for the week ending June 14. However, the official data from the US EIA (Energy Information Administration), expected later in the day, will provide a clearer picture of the crude oil inventory levels in the United States.
In the domestic commodity market, June natural gas futures on the MCX were trading at Rs 244 during the initial hour of trading on Wednesday morning, up by 0.83 per cent from the previous close of Rs 242.
On the National Commodities and Derivatives Exchange (NCDEX), July cottonseed oilcake contracts were trading at Rs 2,744 in the initial hour of trading on Wednesday morning, marking a 0.22 percent increase from the previous close of Rs 2,738. Meanwhile, July guargum futures on the NCDEX were trading at Rs 10,780, down by 0.33 per cent from the previous close of Rs 10,816.