Oil markets brace for volatility amid Middle East supply tensions

Oil markets are positioned for continued swings this week, with supply concerns centred on West Asia keeping traders cautious despite some tentative relief measures. Unresolved diplomatic talks between Washington and Tehran have added to concerns about potential disruptions to global crude flows, analysts said.

Market participants will scrutinise key data releases, including weekly crude stock figures from the American Petroleum Institute, Cushing inventory levels, overall US petroleum reserves and import volumes. These indicators are expected to provide crucial insights into the tightness of global supply-demand conditions.

The Strait of Hormuz remains a focal point of concern, with any interference to shipments via this vital waterway capable of significantly constraining worldwide supplies. Recent declines in US crude reserves have offered some reassurance, though geopolitical risks continue to dominate price direction.

"Our outlook remains cautiously bullish, with price movements likely to be driven primarily by geopolitical developments and actual supply disruptions rather than headlines alone," said Ajit Mishra, Senior Vice President of Research at Religare Broking.

In India, the domestic commodities market will remain shuttered during the morning session on Tuesday due to Dussehra celebrations, limiting trading activity during a portion of the week.