New Delhi: Global crude oil prices are unlikely to fall significantly from current levels and could even edge up modestly, despite the impending US-Iran peace deal, analysts and oil industry executives said, as major oil-importing nations rush to rebuild reserves depleted during the West Asia war that disrupted flows through the Strait of Hormuz.
Global crude oil benchmarks hit a three-month low on Tuesday, trading below $80 per barrel, as the US and Iran move to sign a peace agreement on 19 June in Switzerland. Around 6.30pm, the August contract of Brent traded at $79.89, down about 4% from Monday’s close, while the July contract of West Texas Intermediate on the NYMEX fell 4.33% to $77.25 a barrel.
Experts described the slump as an immediate expression of relief following the announcement of the deal, but cautioned that the optimism could fade in the coming days.
“Refiners and OMCs (oil marketing companies) are currently in wait-and-watch mode. It needs to be seen how the situation pans out and whether stability prevails. In case the Strait of Hormuz opens up completely, there is bound to be a surge in demand globally,” said an official with a state-run refiner.
Clarity awaited
Refiners are also awaiting clarity over lifting of sanctions on Iran as the Islamic nation was a major supplier to India prior to US curbs. Iran also provided better credit lines compared to other West Asian countries, the official said, requesting anonymity.
West Asia has traditionally been a major supplier for India with 60–70% of overall energy imports coming from the region. Since the start of the war on 28 February, supplies have declined significantly and currently, they are around 30% of India’s overall oil imports.
Maulik Patel, head of research, Equirus Securities, noted that although crude prices slumped after the announcement of the deal, it is a sentiment-driven move, and not a fundamental re-rating. The February 2026 baseline of $65 per barrel, with OECD (Organization for Economic Co-operation and Development) inventories near 2.9 billion barrels and expectations of oversupply, are now a distant memory.
“With OECD inventories having drawn sharply toward the 2,650–2,700 million barrel range, and the risk of falling to multi-year lows covering only 50–60 days of global demand by September 2026, oil prices are unlikely to go below $75/bbl. A peace deal reopens a shipping lane; it does not refill the cumulative supply shortfall of more than 800 million barrels. We expect near-term equilibrium around $75–80/bbl, with a return to the $60–70/bbl range remaining structurally unlikely even if peace returns and the Strait of Hormuz fully reopens in 2H2026,” Patel said.
Queries emailed to Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd were not immediately answered.
Six months to raise output
Madan Sabnavis, chief economist at Bank of Baroda, said the West Asian oil producers would require at least six months to ramp up output. While prices may not go up from current levels, they may move in a $80–90 per barrel range.
Any trade or energy-related development in West Asia has a significant bearing on India, as the country is a net importer of crude oil and imports nearly 90% of its total requirements. In FY26, it imported crude worth around $123 billion, or about 17.4% of the total import bill. An increase of $1 per barrel of oil for a year can add ₹18,000 crore to its overall import bill.
Despite the halt to hostilities, major shipping companies remain reluctant to immediately restore normal operations, amid persistent concerns over maritime security in one of the world’s most strategic waterways. According to industry executives, while the agreement could eventually normalize vessel movement through the Gulf and sharply reduce freight and insurance costs, shipping lines, insurers and charterers are likely to wait for detailed security assurances before resuming regular services.
Prashant Vashisht, senior vice-president and co-group head, corporate ratings, Icra Ltd, said: “As the Strait of Hormuz opens up, all oil-consuming countries will look at procuring oil from West Asia and filling their reserves including major buyers in Europe and Asia. This will not let prices to plummet. The war took away about 11–12 million barrels of daily oil supplies out of the market and emergency releases by the IEA (International Energy Agency) added about 400 million barrels. There is a significant gap right now, and for the supplies to resume at full capacity it would take a few months’ time.”
High on agenda
The proposed peace deal is high on the agenda, as leaders of G7 countries, including US president Donald Trump, meet in France. French president Emmanuel Macron said the priority was to ensure that there is a “solid, serious agreement that is finalized”. He said that Tuesday’s working lunch would focus on reopening the Strait of Hormuz, including a possible Franco-British-led maritime mission, along with identifying alternative energy routes that bypass the waterway.
Trump has already said the Strait of Hormuz would be “completely open” on Friday, which is when a formal agreement will be signed in Geneva. However, differences seem to persist over a fee to be charged by Iran. While the US has said no toll would be levied by Iran for transit through the Strait of Hormuz, Iran’s foreign ministry indicated on Monday that the country plans to charge maritime service fees, rather than transit tolls, on vessels passing through the strategic waterway once it reopens.
Speaking to Iran’s Tasnim news agency, foreign ministry spokesperson Esmaeil Baqaei said Tehran does not intend to impose transit tolls on ships using the strait. Instead, the fees would cover services such as navigational assistance, environmental protection measures, ship insurance and other maritime support jointly provided by Iran and Oman.
C. Uday Bhaskar, director, Society of Policy Studies, said: “Many critical factors are still imponderable, and there is a possibility that Israel could scuttle the deal. Let the agreement be signed on Friday – and once more details emerge, there would be a better sense about the impact on the market.”
Ramita Mishra contributed to this story.