Crude Prices Dip Below $75, But Market Volatility Persists
Global crude oil prices have eased below the $75-per-barrel threshold following the reopening of the Strait of Hormuz, providing some relief to energy markets. However, analysts warn that prices are unlikely to return to the stable $65–$70 range seen before the US-Iran conflict without significant shifts in supply dynamics.
The Current State of Brent and the Indian Oil Basket
As of recent trading, Brent crude has been hovering around $73.4 per barrel. A notable development is the pricing of the Indian oil basket—a strategic blend of sweet-grade Brent dated and sour-grade Oman and Dubai average crude—which is currently priced at $74.34 per barrel.
This current figure represents less than half of the peak prices seen during the height of the recent geopolitical conflict. Before the tensions escalated on February 28, both Brent and the Indian basket averaged between $65 and $70 per barrel. During the peak of the crisis, Brent surged to nearly $114, while the Indian basket reached a staggering $150 per barrel due to rising West Asian crude costs, high premiums on spot purchases by Indian refiners, and spiked freight and insurance expenses.
Strategic Shifts in Indian Refining Sourcing
One of the primary reasons for the divergence in pricing is a significant shift in the composition of the Indian oil basket. To mitigate risks caused by disrupted West Asian supplies, Indian refiners aggressively diversified their sourcing in March.
Between 2025-26 and February, the Indian basket was composed of 78.71% sour crude (Oman and Dubai average) and 21.21% Brent dated. However, in March, this mix shifted dramatically to 38.98% sour crude and 61.02% Brent dated. While Brent futures reflect deliveries over a longer timeframe, the Indian basket captures the actual prices paid for cargo, making this compositional shift a critical factor in domestic energy costs.
Outlook: Why Prices May Climb Again
Despite the temporary dip, experts remain cautious about a sustained downward trend. S&P Global Energy suggests that while the Strait of Hormuz has reopened, a full recovery in global production and trade flows will take time. Furthermore, global oil inventories are projected to decline through June and July, which could exert renewed upward pressure on prices.
Market analysts are predicting high volatility ahead. Jim Burkhard of S&P Global Energy anticipates Brent could move into the $80–$90 range, with potential swings between $65 and $100 depending on geopolitical developments. Similarly, JP Morgan has adjusted its outlook, forecasting Brent to average $86 per barrel in the third quarter of 2026 and $80 per barrel in the fourth quarter.
Key Takeaways
- Compositional Shift: Indian refiners have moved from a sour-crude-heavy basket (78.71%) to a Brent-heavy mix (61.02%) to secure supplies amidst West Asian disruptions.
- Price Volatility: While prices have dipped below $75, experts predict Brent could swing between $65 and $100 based on geopolitical events and inventory levels.
- Inventory Pressures: Declining global oil inventories through June and July are expected to act as a catalyst for potential price increases.