Crude Prices Dip Below $75, but Stability Remains Elusive

Global crude oil prices have seen a significant cooling period, with Brent crude trading near $73.4 per barrel following the reopening of the Strait of Hormuz. However, despite this recent decline, market analysts warn that oil prices are unlikely to return to their pre-conflict levels of $65–$70 per barrel in the immediate future.

The Shift in Indian Crude Basket Composition

The Indian oil basket, a critical metric for the domestic economy, is currently priced at $74.34 per barrel. This is a stark contrast to the extreme volatility witnessed during the US-Iran conflict that erupted on February 28. At the height of the tension, the Indian basket surged to a staggering $150 per barrel, driven by skyrocketing West Asian crude prices, high spot purchase premiums, and increased freight and insurance costs.

A key factor in the current price stabilization is the strategic shift in sourcing by Indian refiners. Between 2025-26 and February, the Indian crude basket was heavily weighted toward sour crude (Oman and Dubai average) at 78.71%, with Brent dated making up only 21.21%. However, as West Asian supplies faced disruptions in March, refiners diversified their portfolios. This shift saw the Brent component jump to 61.02%, while sour crude dropped to 38.98%, fundamentally altering the basket's price dynamics.

Market Volatility and Inventory Pressures

While the reopening of the Strait of Hormuz has provided temporary relief, S&P Global Energy suggests that a full recovery in global production and trade flows will be a slow process. The market faces a looming supply-demand imbalance, as global oil inventories are projected to continue declining through June and July. This contraction in stocks is expected to exert renewed upward pressure on prices.

Jim Burkhard, head of research at S&P Global Energy, noted that extreme volatility is expected to persist. He suggested that while Brent currently sits around $76, it could oscillate between $65 and $100 depending on geopolitical developments. He specifically highlighted the potential for Brent to move toward the $80–$90 range.

Future Price Outlooks from Global Analysts

Financial institutions are recalibrating their expectations for the coming quarters. JP Morgan has recently lowered its average Brent price outlook, projecting that Brent will average $86 per barrel in the third quarter of 2026 and settle at $80 per barrel in the fourth quarter.

For Indian businesses and policymakers, this means that while the era of $150 oil may have retreated, the era of "cheap" $65 oil remains out of reach for now. The interplay between geopolitical stability in West Asia and global inventory levels will remain the primary driver of energy costs in the coming months.

Key Takeaways

• Strategic Sourcing: Indian refiners have significantly increased their Brent crude mix from 21.21% to 61.02% to mitigate risks associated with West Asian supply disruptions.
• Inventory Concerns: Declining global oil inventories through June and July are expected to create upward price pressure, preventing a return to pre-war levels.
• Projected Volatility: Analysts expect Brent to remain volatile, with potential price swings ranging from $65 to $100 per barrel depending on geopolitical shifts.