Crude oil futures rise amid West Asia tensions 

Crude oil futures fell by more than 1.7 per cent on Monday after the Organisation of the Petroleum Exporting Countries and allies decided to increase production output.

Crude oil futures traded higher on Tuesday morning amid rising tensions in the West Asian region.

At 9.58 am on Tuesday, July Brent oil futures were at $61.19, up 1.59 per cent, and June crude oil futures on WTI (West Texas Intermediate) were at $58.04, up 1.59 per cent. May crude oil futures were trading at ₹4906 on Multi Commodity Exchange (MCX) during the initial hour of trading on Tuesday against the previous close of ₹4,832, up 1.53 per cent, and June futures were trading at ₹4,901 against the previous close of ₹4829, up 1.49 per cent.

On Monday, Israel carried out air strikes on Hodeidah port and a cement factory in Yemen. This follows missile attack by the Houthis on Israel’s Ben Gurion airport on Sunday.

Israeli Prime Minister Benjamin Netanyahu had stated that attacks by the Houthis emanate from Iran. Israel will respond to the Houthi attack against its main airport and, at a time and place of its choosing, he added.

Crude oil futures fell by more than 1.7 per cent on Monday after the Organisation of the Petroleum Exporting Countries and allies (OPEC+) decided to increase production output.

An OPEC+ statement said that the eight participating countries will implement a production adjustment of 4,11,000 barrels per day in June 2025. Market players feel that this increase in production would increase crude oil supplies to the global market.

Meanwhile, Diamondback Energy of the US said that the US onshore oil production will begin to decline this quarter.

In a letter to stockholders, Travis D Stice, Chairman of the Board and Chief Executive Officer of Diamondback Energy, Inc, said the cost of supply for the average barrel of oil produced in the US has increased over the past decade. On an inflation-adjusted basis, there have only been two quarters since 2004 where front month oil prices have been as cheap as they are today (excluding 2020 which was impacted by the global pandemic).

“Therefore, we believe we are at a tipping point for US oil production at current commodity prices. As crude pricing moves lower for a period of time, as it has over the last month, we expect activity to slow and oil production to decline,” Stice said. It is likely that US onshore oil production has peaked and will begin to decline this quarter, the letter said.

May natural gas futures were trading at ₹305.80 on MCX during the initial hour of trading on Tuesday against the previous close of ₹300, up 1.93 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), May jeera contracts were trading at ₹21950 in the initial hour of trading on Tuesday against the previous close of ₹22115, down by 0.75 per cent.

May turmeric (farmer polished) futures were trading at ₹13,762 on NCDEX in the initial hour of trading on Tuesday against the previous close of ₹13,914, down 1.09 per cent.

Published on May 6, 2025