Crude Oil Prices Fall As US-Iran Ceasefire Eases Supply Concerns

Global crude oil prices have fallen sharply and are trading near their lowest levels since the start of the Middle East conflict, offering relief to oil marketing companies (OMCs) and major oil-importing countries.

Analysts said prices could soften further if the US-Iran situation continues to improve and normal shipping operations resume fully through the Strait of Hormuz.

PL Capital (Prabhudas Lilladher) expects crude prices to rise again as countries rebuild inventories and Strategic Petroleum Reserves (SPRs), creating additional demand.

The brokerage said sentiment has improved following the signing of a US-Iran ceasefire agreement after months of severe disruption in energy markets, although uncertainty remains over the nuclear deal.

Brent crude has dropped below $80 per barrel, its lowest level since March 2026.

While lower prices will likely support OMCs, analysts believe the first quarter of FY27 will remain challenging.

According to Swarnendu Bhushan, Co-Head of Research at PL Capital, OMCs are likely to face under-recoveries of Rs 7 per litre and Rs 10 per litre in Q1 FY27 despite factoring in a Rs 10-per-litre excise duty cut and capped refining cracks of $10 per barrel for petrol and $15 per barrel for high-speed diesel.

Analysts noted that lower crude prices were insufficient to offset the full-quarter impact of elevated input costs and weaker marketing margins, leaving overall Q1 FY27 earnings under pressure. They also identified a potential rollback of the excise duty reduction as a key risk.

With crude prices moderating, fuel price hikes already implemented, and marketing margins recovering, the government could gradually withdraw the temporary tax relief measure.

PL Capital said OMC profitability is likely to remain under pressure through FY27 despite improving market sentiment and easing geopolitical risks.

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