Crude Prices Drop 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, oil prices are not yet returning to their pre-conflict baseline. Although Brent crude has dipped below the $75 mark, volatility remains high as markets navigate the aftermath of the US-Iran conflict.

Current Market Status and Price Divergence

As of the latest market reports, Brent crude is trading at approximately $73.4 per barrel. The Indian oil basket—a critical benchmark consisting of a blend of sweet-grade Brent dated and sour-grade Oman and Dubai average crude—is priced at $74.34 per barrel. While these figures represent a significant drop from the heights seen during the recent conflict, they remain notably higher than the $65–$70 range seen prior to the outbreak of tensions on February 28.

During the peak of the conflict, Brent crude surged to nearly $114 per barrel. For India, the impact was even more severe; the Indian oil basket touched $150 per barrel. This spike was driven by a combination of surging West Asian crude prices, Indian refiners making spot purchases at high premiums, and a sharp rise in freight and insurance costs.

Shifting Composition of the Indian Oil Basket

A significant factor in the current pricing dynamics is the strategic shift in sourcing by Indian refiners. To mitigate the risks posed by disrupted West Asian supplies, refiners have aggressively diversified their crude mix.

Data shows a dramatic shift in the composition of the Indian crude basket. Between 2025-26 and February, the basket was composed of 78.71% sour crude (Oman and Dubai average) and 21.21% Brent dated. However, in March, this composition shifted significantly to 38.98% sour crude and 61.02% Brent dated. While Brent futures reflect long-term delivery expectations, the Indian basket captures the immediate, actual prices paid for cargo, making it highly sensitive to these sourcing changes.

Future Outlook: Volatility and Supply Constraints

Despite the reopening of the Strait of Hormuz, experts warn that a full recovery in production and trade flows will not happen overnight. S&P Global Energy indicates that global oil inventories are expected to continue declining through June and July, a factor that could exert renewed upward pressure on prices.

Market analysts suggest a wide corridor for potential price movements. Jim Burkhard of S&P Global Energy expects Brent to fluctuate between $65 and $100, with a likely move toward the $80–$90 range. Meanwhile, JP Morgan has tempered its outlook, forecasting Brent to average $86 per barrel in the third quarter of 2026 and $80 per barrel in the fourth quarter. For Indian businesses, this implies that while the immediate crisis has passed, the era of cheap, stable energy remains on hold.

Key Takeaways

• Price Recovery is Gradual: Although Brent is currently near $73.4, it remains above the $65–$70 pre-war levels, indicating that market stabilization is still underway.
• Strategic Sourcing Shifts: Indian refiners have significantly increased their reliance on Brent dated (from ~21% to ~61%) to hedge against West Asian supply disruptions.
• Persistent Volatility: Analysts expect continued price swings between $65 and $100, driven by declining global inventories and the slow recovery of trade flows.