Brent crude, which had touched US$95.29 a barrel on 21 August, fell for three straight sessions to trade just below US$86 by Wednesday, as satellite tracking suggested Saudi Arabia was loading more crude from inside the Persian Gulf and US President Donald Trump said some 10 million barrels had passed through the Strait of Hormuz on a single day.
Iran and Oman reportedly reached an understanding on dividing Hormuz’s waters and revenues, though Tehran cautioned that reopening the waterway fully would need more than a bilateral nod.
Markets also took comfort from fresh American sanctions on Iran turning out milder than feared, sparing Tehran’s trading partners the harshest measures under discussion.
The relief was tempered, though, by reports that Russia was weighing a fresh escalation in Ukraine, a reminder that the conflict shaping oil markets since March has more than one flashpoint. The EIA still expects Brent to average near US$85 a barrel through the third quarter before drifting down to US$69 in 2027 as Hormuz-related shut-ins of roughly 0.6 million barrels a day gradually unwind.
OPEC+ has, meanwhile, finished the job it set out to do this year. The group’s 188,000-barrel-a-day increase for September completes the rollback of the 1.65 million bpd of voluntary cuts first imposed in 2023, though roughly 2 million bpd of older curbs stay in place. Delegates expect quotas to hold steady into 2027, with the next review on 6 September.
India’s basket and the Russian retreat
The Indian crude basket, blending sour Gulf grades with sweet Brent-linked cargoes, stood at US$85.2 a barrel as of early August, and has likely eased in step with Brent through the past week, though PPAC’s fortnightly cadence means the official print will lag the spot move. For every dollar the basket falls, India’s annual import bill shrinks by roughly ₹8,578 crore (USUS$900m), a rule of thumb the government has leaned on for years.
The bigger shift this week is compositional. Russia’s share of India’s crude imports climbed from around 23% in January to more than half of the basket through June and July, but Kpler estimates Russian volumes will average only 1.8-2.0 million bpd in August, down from 2.7 million bpd, after Ukrainian drones knocked out loadings at Novorossiysk’s Sheskharis terminal, which normally handles some 700,000 bpd, and as MRPL and Panipat undergo planned turnarounds.
“Discounts on Russian barrels still comfortably absorb the extra freight, and the route has stayed clear of the Houthi threat that other suppliers face in the Red Sea,” said an analyst tracking global crude markets. Most importantly, sanctioned Russian oil has effectively become the safer delivered option for Indian refiners, even as Gulf and American suppliers wrestle with chokepoint risk.
Gulf producers are adapting in their own way. Around 60% of UAE and Saudi crude reaching India is now loaded from Fujairah and Yanbu, bypassing Hormuz entirely via the Abu Dhabi pipeline and Saudi Arabia’s Petroline.
Venezuelan barrels nearly doubled to roughly 400,000 bpd in the first half of August, while US crude has withered to about 102,000 bpd from a peak of 565,000 bpd last October, undone less by sanctions than by simple economics: light sweet American grades suit Indian refiners poorly, and a 40-day voyage erodes any price edge.
Margins strong for now, but the cushion is thinning
Refiners have had a good run. Reliance Industries reported a Singapore-beating gross refining margin of US$21.3 a barrel in the June quarter, up from US$5.6 a year earlier, as wide diesel and jet-fuel cracks flattered the whole sector. CARE Ratings notes Indian GRMs of US$7-13 a barrel have decoupled from Singapore’s US$4-5 benchmark, largely on the back of discounted Russian crude.
That cushion, however, is under structural pressure. November 2025’s US sanctions on Rosneft and Lukoil, January’s EU ban on products refined from Russian crude, and February’s US-India tariff deal — which cut duties on Indian goods from an effective 50% to 18% in exchange for New Delhi trimming Russian oil imports — are together nudging refiners to reconfigure their sourcing baskets.
“We are already diversifying feedstock ahead of any further tightening, rather than waiting for margins to be squeezed,” said an executive at a leading Indian refiner.
Retail consumers have felt none of this. Petrol and diesel prices have stayed frozen even as crude swung wildly this year, with the government using a ₹10-per-litre (≈ US$0.105) excise cut in March to help state refiners absorb losses rather than pass on savings. ICICI Securities estimates OMCs lost around ₹18.9 (≈ $0.198) a litre on diesel in the April-June quarter even as petrol margins stayed positive, with Petroleum Minister Hardeep Singh Puri putting cumulative under-recoveries at close to ₹75,000 crore (USUS$7.9bn) for the quarter.
Policy threads: ethanol moves, upstream stalls
On biofuels, the Bureau of Indian Standards’ notification of E22, E25, E27 and E30 specifications in May has been followed by an excise-duty waiver on higher ethanol blends, a structural nudge to fuel suppliers rather than an immediate saving for motorists, since pump prices remain untouched.
Upstream, the government’s largest-ever licensing round, OALP-X, alongside OALP-XI, remains in limbo after a unified bid deadline of 19 June came and went without a formal award announcement, underscoring the gap between India’s stated ambition to cut import dependence and the slow pace of attracting exploration capital, a tension this publication has examined in the context of the Hormuz standoff.
For India’s broader energy security debate, the week’s lesson cuts against the usual chokepoint narrative: it is drone strikes on Russian terminals and refinery maintenance schedules, not the Strait of Hormuz alone, that are moving the needle on India’s crude sourcing just now.
As this publication detailed in its reading of the IEA’s August Outlook, the deficit story is far from resolved, and a falling Brent this week offers relief without yet offering certainty.
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