Crude Oil Prices Drop Below $75, But Volatility Remains a Major Risk
Global crude oil prices have retreated below the $75-per-barrel mark following the reopening of the Strait of Hormuz, offering some relief to energy markets. However, analysts warn that prices are unlikely to return to the stable $65–$70 range seen before the recent US-Iran conflict without significant market shifts.
The Current State of Brent and the Indian Oil Basket
As of recent trading, Brent crude has settled at approximately $73.4 per barrel. The Indian oil basket—a critical metric for India's energy security consisting 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 conflict's peak, they remain higher than the pre-conflict average of $65–$70. During the height of the geopolitical tensions that broke out on February 28, Brent crude had surged to nearly $114 per barrel. The Indian basket saw an even more dramatic spike, touching $150 per barrel due to a combination of rising West Asian crude prices, high premiums on spot purchases by Indian refiners, and escalating freight and insurance costs.
Strategic Shift in India’s Crude Sourcing
A significant factor in the current pricing of the Indian oil basket is a major shift in its composition. To mitigate the risks posed by disrupted West Asian supplies, Indian refiners have aggressively diversified their sourcing.
Through February 2025-26, the Indian basket was heavily weighted toward sour crude, which accounted for 78.71% of the mix (Oman and Dubai average), with Brent dated at only 21.21%. However, in March, this composition shifted drastically: Brent dated rose to 61.02%, while sour crude dropped to 38.98%. This pivot to Brent-heavy sourcing has fundamentally changed how Indian refineries manage price volatility and supply chain continuity.
Outlook: Why Prices May Not Stay Low
Despite the easing of immediate tensions at the Strait of Hormuz, market experts remain cautious. S&P Global Energy indicates that a full recovery in global production and trade flows will not happen overnight. Furthermore, global oil inventories are projected to decline through June and July, a trend that could exert renewed upward pressure on prices.
Jim Burkhard, head of research at S&P Global Energy, predicts continued volatility, suggesting Brent could move into the $80–$90 range, with potential swings between $65 and $100 depending on geopolitical developments. Reflecting this uncertainty, JP Morgan has adjusted its Brent price outlook, forecasting an average of $86 per barrel in the third quarter of 2026 and $80 per barrel in the fourth quarter.
Key Takeaways
- Price Volatility: While crude has dropped below $75, the market remains prone to massive swings, with experts predicting potential moves between $65 and $100 per barrel.
- Sourcing Diversification: Indian refiners have significantly shifted their oil basket composition, moving from a 78.71% sour-crude dependency to a 61.02% reliance on Brent dated to ensure supply security.
- Inventory Pressures: Declining global oil inventories through mid-year may counteract recent price drops and push Brent back toward the $80–$90 range.