The oil shock left India better off than it found it

Brent crude began March 2026 near $71 a barrel, touched roughly $118 at the peak of the West-Asia war in May, and by mid-July was back at $73. A 38% collapse from the peak, in about ten weeks, has taken the oil price almost exactly back to where the war found it.

Brent crude at three points in 2026. Data: Investing.com, IEA, EIA via Motilal Oswal Private Wealth; as of July 2026.

Three supply-side events unwound the spike together. The United States and Iran signed a memorandum of understanding that ended the conflict and reopened the Strait of Hormuz. China, the world’s largest crude importer, cut its imports by roughly 4.6 million barrels a day, which is about 5% of global supply simply not being bought. And the UAE’s exit from OPEC in May freed it to pump above its old quota. Global supply had fallen from 107 to 92 million barrels a day through the war; it is now projected to rebound to about 110 by December against demand of roughly 105. A market that spent the spring in shortage is heading into winter in surplus.

For India, an oil importer, the reversal matters more than the spike did. The correction has eased inflationary pressure, strengthened the external account, and helped push the 10-year government bond yield down to the 6.7–6.8% band. A war that briefly looked like a structural supply shock has instead left India’s macro backdrop better than before it started, which is roughly the opposite of how the March headlines read.

All three drivers can reverse. A memorandum is not a treaty. Chinese demand can return as quickly as it left, and a projected 5 million barrel-a-day surplus is an estimate, not a delivery; prices have already inched up from the July low. The lesson of the past ten weeks is less “oil is cheap now” than a reminder of how fast a consensus macro fear can fully price in, and fully price out, within a single quarter, and how expensive it is to reposition a portfolio around each headline in between.

What we’ll watch: whether the December supply estimate (~110 mb/d) holds as OPEC responds to the UAE’s exit, and whether the 10-year yield stays in its 6.7–6.8% band once the crude windfall is fully passed through.