New Delhi: Global crude oil prices fell on Thursday to their lowest since before the outbreak of the Iran conflict, handing India a fresh economic tailwind. As the world's third-largest crude importer, the country stands to gain from easing inflation risks, a lighter import bill and an improved fiscal position.
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Brent crude, the international benchmark, eased to about USD 72-73 a barrel. US crude slipped below USD 70 a barrel. The retreat has erased the geopolitical risk premium that had pushed prices as high as USD 120 a barrel at the height of the conflict earlier this year. Both benchmarks are now trading near levels last seen in late February, before hostilities disrupted Middle East energy markets.
Retail fuel rates were left unchanged on Thursday even as crude fell. Petrol and diesel prices had each been raised by about Rs 7.50 per litre during the recent spike in international oil prices, but state-owned retailers have so far refrained from cutting pump rates, industry data showed.
Officials said the three state-run fuel retailers are currently earning healthy marketing margins on petrol, while diesel sales continue to run a modest loss. The companies had held retail prices steady for nearly two-and-a-half months through rising global crude before going for only a partial increase.
Industry officials said fuel prices are not adjusted to daily moves in international crude. Rates are typically guided by average oil prices over the preceding fortnight or month. Any benefit from the recent correction could therefore take time to show up at the pump, and only if lower international rates are sustained.
The easing in oil markets has also shaped the government's response. Inter-ministerial briefings set up after the conflict broke out have quietly been paused, signalling reduced concern over immediate supply disruptions.
The briefings were held daily at first and later cut to twice a week. They brought together officials from key ministries to update the public on the country's preparedness and crisis management. Officials from the Ministry of Petroleum and Natural Gas and Shipping Ministry were a regular presence, detailing the movement of traffic through Strait of Hormuz and steps taken to safeguard fuel supplies and keep markets stable.
No briefings were held this week on the scheduled days of Monday and Thursday. The pause underscores the government's assessment that risks to energy supplies and trade flows have eased after the de-escalation and the retreat in prices.
The Indian basket of crude averaged USD 71.17 per barrel the day before the US and Israel attacked Iran, an assault that drew sweeping retaliation from Tehran and effectively shut the Strait of Hormuz, the conduit for oil and gas from Gulf countries to buyers such as India.
The same basket averaged USD 70.71 a barrel on June 24, according to the Oil Ministry's Petroleum Planning and Analysis Cell (PPAC), placing it back at pre-conflict levels.
For June, the Indian basket has averaged USD 86.31 per barrel, against an average of USD 72.47 for February 2026.
The price decline followed a normalisation of tanker traffic through the Strait of Hormuz, through which roughly one-fifth of global oil supplies pass. US officials said at least 20 million barrels moved through the waterway over the past 24 hours, with flows nearing pre-war levels.
India imports more than 88 percent of its crude oil needs. Every USD 10-per-barrel fall in prices translates into billions of dollars in annual savings on the import bill and helps narrow the current account deficit.
The drop is expected to ease pressure on retail inflation by lowering fuel, transport and manufacturing costs. It could also trim the energy subsidy burden and improve government finances, giving policymakers more fiscal room.
Lower prices are particularly helpful for aviation, paints, chemicals, logistics and consumer goods, where fuel and petrochemical derivatives are major input costs. Shares of fuel-intensive companies have already moved up, with investors betting on better margins.
The fall also supports the rupee by reducing dollar demand for energy imports. A lighter oil bill can help contain imported inflation and underpin domestic consumption, a key driver of growth.
Market participants said the sharp reversal shows how quickly geopolitical risk premiums unwind once supply fears recede. Brent has fallen more than 20 percent this month and is roughly 30 percent below the peaks reached during the conflict, as Gulf exports recover and shortage concerns ease.
For the Reserve Bank of India (RBI), softer energy prices could strengthen the case for keeping an accommodative stance if inflation stays contained, adding support to economic activity.
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Analysts cautioned that geopolitical risks in the Middle East have not disappeared entirely. Even so, Thursday's move returns pricing to where it stood before the conflict, offering immediate relief to one of the world's most oil-dependent major economies.