25-02-2026

Executive Summary.

This week saw a strong rally in crude oil prices. Brent crude (global benchmark) reached about $71-72 per barrel, and WTI (West Texas Intermediate, the US benchmark) hit $66-67 per barrel. These are the highest levels in about 7 months. The surge in prices was driven mainly by geopolitical tensions especially high US-Iran tensions rather than basic supply & demand factors. Key highlights: large inventory builds in the US, resilient Russian exports, and expectations of near-term volatility as traders react to news. Analysts note that fear of supply disruptions (risk premium) pushed prices up, even though actual oil supply has not fallen.

Key Points:

• Benchmarks at Multi-Month Highs: Brent ~$71-72, WTI ~$66-67 (7-month highs)
• Tensions Rising: US-Iran conflict risks dominating market talk
• Big US Stock Build: Surprise +11.4 million barrel jump in US inventories.
• Volatility Ahead: Very large price swings expected in short term

25-02-2026

Geopolitical Influences.

Oil markets are being driven by geopolitics right now. The key factor is US-Iran tensions amid nuclear talks, which are seen as very risky. This conflict is pushing up prices independent of oil fundamentals.

US-Iran Nuclear Talks: High-stakes negotiations are underway in Geneva. Markets are unsettled because of two main fears:

(1) If talks fail, Iran or the US might escalate (for example, Iran could restrict its oil exports or threaten the Hormuz chokepoint),

(2) the risk of direct military conflict. Either scenario could sharply cut supply.

Strait of Hormuz (Critical Chokepoint): This narrow waterway between Iran and Oman is vital for oil flow. About 20-21 million barrels per day of crude pass through it - roughly 20% of global oil trade. Any blockage (by accident or intention) would have a massive impact. Traders know this, so even talk of trouble there sends prices up quickly.

Other Chokepoints: The Suez Canal (~9 Mbpd) and Bab-el-Mandeb (~6 Mbpd near Yemen) also matter, but their flows are smaller or less at risk right now.

Market Psychology: A common saying in oil markets is “buy the rumor, sell the news.” Right now, traders are “buying the rumor” of conflict - they are jumping into long positions (bets that prices will rise) in case things get worse. If news later shows tensions easing, that buying may reverse sharply. So far no actual supply loss has happened, but prices have risen as if there was one.

Overall, geopolitics are elevating prices by about $5-10 per barrel, according to some banks. In essence, oil buyers are paying an extra “fear premium” just in case.

25-02-2026

Crude Oil Inventory Data

The chart’s most dramatic movement occurs in June 2025 where the index plunges to its lowest recorded point of -11.5. This sharp contraction is immediately followed by an aggressive recovery, with the value surging back to +7.7 within a short timeframe. Even in 2026, the data remains erratic, showing a final upward tick toward the +4.0 mark. Overall, the visualization suggests a highly reactive economic environment where significant gains are frequently offset by equally sharp corrections.

One fundamental factor is US oil stockpiles, reported weekly by the EIA Normally, more oil in inventory pushes prices down, since it means supply exceeded demand.

Recent Build: This week saw a huge surprise build of +11.4 million barrels in US crude inventories. Markets usually expect builds of only 1-3 million barrels in a week.

25-02-2026

Why so big?

The large build was partly due to weaker refinery demand (refiners were taking crude in more slowly) and higher imports. Because of this, US storage rose sharply.

Market Reaction: Normally, an 11.4M build would drastically depress prices (a bearish signal). However, this week the surge in prices ignored the data. The geopolitical premium overwhelmed the inventory effect. In other words, traders were more focused on fear of future disruption than on current oversupply.

Outlook: If tensions ease, that oversupply will likely hit prices. Investors are watching next week’s EIA report closely. If we see another big build, and if geopolitical risks calm down, fundamentals would push prices down.

This Week’s Case: +11.4M build (bearish), but prices stayed high because of risk premium.

25-02-2026

Oil Logistical Support

Russia remains a key oil supplier despite sanctions from Western countries. The RussiaUkraine war prompted many restrictions, but Russia has found ways to keep exporting. This week’s shipping data shows Russian seaborne exports have held up.

Main Buyers: China and India are the largest customers for Russian oil now. Turkey also buys Russian oil. In total, Russia still sends roughly 8-10 million barrels per day (Mbpd) into world markets via these methods.

Shadow Fleet: To evade sanctions, many older tankers operate outside Western insurance and tracking. This “shadow fleet” (about 600-700+ ships) carries Russian, Iranian, and Venezuelan oil in secret. It keeps sanctioned oil moving, though at higher cost.

Tanker Economics: Because routes are longer and riskier, freight costs have risen. For example, shipping from Russia to India now takes over 16-20 days (no change in time, but higher cost), and to China about 20-25 days at elevated costs. Western insurance bans mean using third-country insurers or going unregistered, raising costs ~10-20%.

Impact on Supply: These exports cushion global supply. Without Russian oil, prices would be even higher now. But sanctions and higher shipping costs mean Russia’s oil effectively “costs more” to deliver. Still, the continued flow has prevented a bigger supply gap.

25-02-2026

Global Supply Situation,

Beyond Russia, overall world oil supply is not tight - in fact there’s a structural surplus. Much of this surplus oil is tied up in ships (floating storage) and sanctioned sources.

Global Balance: World demand is around 102-103 Mbpd. Production is roughly: OPEC+ (43-44 Mbpd), non-OPEC (58-59 Mbpd), plus about 9-10 Mbpd from Russia (some overlapping with OPEC+ measure). In total this slightly exceeds demand.

Floating Storage: A major chunk of surplus is sanctioned oil stuck at sea. Iran alone has an estimated 60-80 million barrels floating offshore, waiting for a chance to sell. Venezuela has additional tens of millions. This oil is effectively “on hold” due to sanctions. If sanctions ever loosen, this supply could flood markets.

Price Impact: Right now this extra oil is not hitting markets, so it mainly weighs on long-term fundamentals. It creates an overhang that keeps a ceiling on prices. Even as prices hit multi-month highs, the market knows there’s a lot of supply in waiting. This is why analysts say fundamentals are bearish: abundant supply should push prices down eventually.

Surplus Paradox: It may seem strange that prices are high when supply is ample. The answer is the geopolitical risk premium. Traders are essentially paying now for “insurance” against potential future shortages. So prices are elevated on fear, not on current shortages.

25-02-2026

Market Sentiment & Volatility

Market mood is bullish on geopolitics but cautious on fundamentals. Sentiment indicators show traders expect big price swings ahead.

                 Volatility: Options markets signal high implied volatility in oil prices. This means traders expect prices to move a lot either way

Key Scenarios:

US-Iran Talks Fail or Tensions Escalate: If diplomacy breaks down, traders expect Brent could quickly jump to $75-80+ or even higher (Hormuz blockade fears could push it toward $85-90 or more). This would cause a sharp rally.

Talks Succeed / De-escalation: If the Iran nuclear talks go well, the risk premium would drop. Prices could slide to around $65-68 per barrel. This would be a sharp drop.

Status Quo: If nothing major happens, oil might stay around current levels ($70-73), moving sideways with normal fluctuations.

Continued Inventory Builds: If US inventories keep growing, there is downside risk. For example, with continued builds, Brent might settle in the $68-71 range as that bearish factor kicks in.

Traders’ Positions: Many speculators are long oil (betting on higher prices) right now because of the fear premium. If risks ease, those longs might unwind quickly, causing a sharp drop (a “long squeeze”).

OPEC+ Tightrope: Chasing Higher Prices Without Losing Market Share

OPEC+ is maintaining production cuts to support oil prices, with Saudi Arabia targeting $80–90/bbl and pushing to keep supply tight while Brent remains below this level. The group aims to balance higher prices with market share, wary that excessive price spikes could trigger a surge in US shale output. While the UAE aligns with Saudi policy and Russia cooperates under sanctions pressure, members like Iraq face revenue needs, Nigeria and Libya struggle with capacity constraints, and Iran’s output remains limited by sanctions.

25-02-2026

Technical Analysis:

Key Levels

Resistance:

 ₹6,050–6,150 → Trendline resistance (current test zone)

 ₹6,150 → Breakdown origin / supply zone

Support:  ₹5,650–5,700 → Immediate demand zone

 ₹5,100–5,200 → Major base support

Bullish Breakout Trade (Preferred)

Condition: Daily close above ₹6,100

 Buy Above: ₹6,150

 Stop Loss: ₹5,600

 Targets:

           o ₹6,300 o ₹6,500

            o ₹6,700 (trend reversal target)

Why: Break of long-term trendline signals structural reversal.

Buy on Dip Buy Zone: ₹5,700-5,800

Stop Loss: ₹5,200

Targets: ₹6,050-₹6,200

Why: Demand zone + trend continuation Bearish Rejection Scenario If price fails at trendline:

25-02-2026

Outlook & Final Thoughts

The crude oil market stands at a crossroads. In the next few weeks, geopolitical news will drive most moves. Over months, supply-demand fundamentals will reassert themselves.

In the near term, the crude oil market is being driven primarily by geopolitics rather than fundamentals. The outcome of US-Iran talks will likely determine price direction over the next one to two weeks: an escalation could push Brent toward $74-78 per barrel, with potential spikes above $80, while a successful diplomatic outcome could pull prices back to the $65–68 range. Despite a sharp 11.4million-barrel build in US crude inventories typically bearish prices have remained elevated as geopolitical risk premiums dominate. Russian seaborne exports continue to flow at high levels, helping meet global demand despite sanctions, but at increased shipping costs. As a result, traders should expect heightened volatility, with sharp price swings triggered by headlines rather than supply-demand data.

Over the medium to longer term, fundamentals are likely to reassert themselves, pointing to a slightly bearish outlook. Rising US shale production, steady Russian supply, and a broader global surplus are expected to weigh on prices, especially if OPEC+ eases output cuts. Inventory trends and China’s demand trajectory will remain key variables, but current supply growth suggests limited upside. Assuming moderate demand growth, Brent crude is likely to stabilize in the mid-$60s to low-$70s over the next 6-12 months, as expanding North American output and floating surplus capacity cap sustained price rallies once geopolitical fears subside.

25-02-2026

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