Crude Oil Prices Dip Below $75, but Pre-War Stability Remains Elusive

While the reopening of the Strait of Hormuz has provided much-needed relief to global energy markets, crude oil prices are not yet returning to their pre-conflict equilibrium. Recent market movements show a significant drop from conflict peaks, yet analysts warn that volatility and supply constraints could soon push prices back upward.

The Current State of Brent and the Indian Oil Basket

As of the latest market reports, Brent crude has dropped to approximately $73.4 per barrel. Similarly, the Indian oil basket—a critical blend of sweet-grade Brent dated and sour-grade Oman and Dubai average crude—is currently priced at $74.34 per barrel. While these figures represent a massive decline from the height of the US-Iran conflict, they remain significantly higher than the $65–$70 range seen before the hostilities broke out on February 28.

During the peak of the conflict, the market faced extreme volatility. Brent crude had surged to nearly $114 per barrel, while the Indian oil basket touched a staggering $150. This spike was driven by a combination of rising West Asian crude prices, high premiums paid by Indian refiners for spot purchases, and escalating freight and insurance costs.

Strategic Shifts in India's Crude Sourcing

One of the primary reasons the Indian oil basket has stabilized at less than half its peak level is a significant shift in its composition. To mitigate the risks posed by disrupted West Asian supplies, Indian refiners have aggressively diversified their sourcing strategies.

Data shows a dramatic change in the basket's mix. Through February, the Indian crude basket consisted of 78.71% sour crude (Oman and Dubai average) and only 21.21% Brent dated. However, in March, this composition flipped: Brent dated rose to 61.02%, while sour crude dropped to 38.98%. While Brent futures reflect long-term deliveries, the Indian basket captures the actual, real-time prices paid for cargo, making this diversification a vital tool for managing domestic energy costs.

Future Outlook: Volatility and Supply Constraints

Despite the easing of tensions in the Strait of Hormuz, experts suggest that a return to "normalcy" is not imminent. S&P Global Energy indicates that a full recovery in global production and trade flows will take time. Furthermore, global oil inventories are projected to decline through June and July, a factor that could reignite upward price pressure.

Market analysts are divided on the exact trajectory of prices. Jim Burkhard of S&P Global Energy suggests that Brent could swing between $65 and $100 depending on geopolitical developments, with a likely move toward the $80–$90 range. Meanwhile, JP Morgan has adopted a slightly more conservative stance, lowering its average Brent price outlook to $86 per barrel for the third quarter of 2026 and $80 per barrel for the fourth quarter.

Key Takeaways

  • Price Stabilization: While crude has fallen below $75, it remains above the pre-conflict baseline of $65–$70 due to lingering supply uncertainties.
  • Diversification Strategy: Indian refiners have pivoted their sourcing, significantly increasing the proportion of Brent dated in the national oil basket to counter West Asian disruptions.
  • Continued Volatility: Declining global inventories through mid-year and geopolitical shifts suggest that prices will remain highly volatile, with potential swings between $65 and $100.