Crude Oil Crash: Oil market benchmark Brent slumped for the fourth trading session in a row on Thursday, June 25, falling to as low as $72.3 per barrel — a level last seen before the onset of the US-Israel-Iran conflict on February 28. It was last seen trading at 72.5, down 1.7 per cent for the day. The latest oil market crash marks a sharp reversal in energy markets. From a Middle East conflict-linked peak of around $126 per barrel — a four-year high, Brent has now shed more than $50 a barrel. In just six weeks, Brent has plunged nearly 40 per cent.
In June so far, Brent has plummeted more than 20 per cent.
Back home, crude oil futures were seen trading at around Rs 6,600 at the last count.
After soaring to $126 per barrel amid Middle East tensions, Brent crude has now retreated to levels seen before the conflict escalated.
With supply conditions improving and geopolitical risks moderating, the commodity remains under pressure.
5 factors before crude oil price crash
The latest bout of correction in crude oil prices is seen as fuelled by a combination of factors. Analysts attribute the slide to five main reasons:
1. US-Iran talks ease market concerns
A perceived easing of tensions between the US and Iran has reduced fears of a prolonged disruption in global oil supplies, with analysts now increasingly factoring in a lower geopolitical risk premium.
2. Strait of Hormuz tanker movement on track to normalcy
Shipping activity through the Strait of Hormuz — a crucial maritime region that has been central to the conflict — has largely normalised after weeks of uncertainty. Concerns around supply bottlenecks have eased considerably, with oil now headed to levels predicted by most experts immediately after the US and Iran signed an interim 14-point memorandum of understanding that could lead to a permanent truce.
3. Higher supply weighs on prices with improving Middle East output
With crude shipments through the strategic route reportedly improving, global supply expectations have strengthened. The return of additional barrels to the energy market is easing concerns about shortages.
Crude availability from key producing regions — including the Middle East and parts of West Africa — has reportedly increased in recent weeks.
4. US allows limited Iranian oil sales
The US has reportedly permitted Iran to continue selling oil for a temporary period. The move has improved expectations around global availability and reduced fears of a sharp supply squeeze. Also, a temporary window allowing Iran to sell oil and petroleum products until August 21 has added comfort to the market.
5. Supply rises as geopolitical risks cool
A combination of increasing supply and declining geopolitical risk has altered market sentiment sharply.
Where is crude oil headed?
Manoj Kumar Jain, director at Prithvi Finmart, expects Brent to consolidate in a range of $70-80 going forward.
“By the end of the year, Brent could stabilise around $75 a barrel. This is assuming that the US-Iran war is finally settled, with no more escalations… But if any dispute arises, the price could see sharp jump towards $85-90 per barrel again,” he told Zeebiz.com.
Let’s take a glance at India’s crude basket
India’s crude oil basket — or the cost that India is estimated to bear for every barrel of crude — has mirrored the gradual fall in oil rates.
According to Zee Business research, here’s how the average basket price has moved over the past few weeks.
| Month | Average Price ($/barrel) |
| April | 114.5 |
| May | 106.2 |
| June | 87.3 |
Which sectors stand to benefit from lower crude prices?
Tyre and paint companies are largely viewed as the biggest beneficiaries of falling crude prices, which bear significant costs due to petroleum-linked inputs.
According to Zee Business research, crude and crude-linked derivatives account for around 35-40 per cent of raw material costs for tyre manufacturers.
For paint companies, crude-derived inputs contribute nearly 55 per cent of raw material expenses.
Analysts see softening input costs boosting profitability for these businesses.
According to Zee Business research, every $10 increase in crude prices can reduce tyre company margins by around 110 basis points (1.1 percentage points) and can dent paintmaker margins by around 50-60 basis points, and vice versa.
