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Key Takeaway
Over the weekend, President Trump officially announced that the United States of America had agreed to end the ongoing war with Iran. The signing of the agreement is set to take place next Friday in Europe. Trump administration says there is an 80% chance of the agreement being signed.
The crisis started on February 28, 2026, following strikes by the United States and Israel against Iran that led to the shutdown of the Strait of Hormuz. It was labelled as the biggest disruption of the global oil market since records first began to be kept.
Ship traffic went down to less than 10 ships daily in the strait from more than 130 before. Oil prices were calculated to be close to $120 per barrel by March 2026. There was an almost 20% decline in Brent crude oil prices from their high point in 2026, especially in May.
India's crude oil requirement is covered by 88% of imported fuel, out of which around half of this quantity comes through the Strait of Hormuz. More than 60% of LPG used by Indian households is imported, out of which 90% passes through the Hormuz route. There have been four hikes in petrol price within 10 days because of the conflict; petrol cost in Delhi touched ₹102.12 per litre.
There was an increase in retail petrol and diesel prices of about ₹7.50 per litre. Public-sector fuel marketing companies incurred losses of about ₹50 crore per day, since the retail price did not adequately reflect the cost of imports. Reduced cost of crude oil, which is due to a deal-based decline in oil prices, would bring immediate benefits to the government’s subsidy bill for fuels.
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According to Bob Parker, Senior Adviser at the International Capital Markets Association, oil prices “will continue to be in the range of around $90-$100 per barrel at least for the next couple of months” until there is further clarity regarding the establishment of sustainable peace accords.
The Chairman Emeritus of FGE NexantECA, Fereidun Fesharaki, had already issued a warning back in March 2026 that a long-lasting near-shutdown of the strait would lead to a rise in oil prices between $150 and $200 a barrel.
The deal between the U.S. and Iran is the biggest diplomatic coup since the closure of the Strait of Hormuz on February 28, 2026. The price of Brent crude dropped to $83.88 per barrel following news of the deal. India, whose crude passes through the strait for 52%, will be most affected positively by the deal.
Why did U.S. oil prices crash to $83 per barrel after Iran officially reopened the Strait of Hormuz for the remainder of the ceasefire?
US oil prices fell to $83 per barrel owing to the success achieved through the diplomatic process, since there was no more concern over supply issues. This was due to the breakthrough deal, which saw the end of military actions and the opening up of the Strait of Hormuz.
What will be the effect of Brent Crude's falling prices on Indian markets?
The fall in the price of Brent crude is typically very bullish for the Indian stock markets. It will help to directly cut down on India's enormous bill for imports while also improving the inflation situation and boosting the strength of the Indian Rupee.
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