It has been another wild day of trading in oil markets. Futures for Brent crude, the global benchmark, dropped about 9% to around $90 a barrel, deepening a decline that began after they briefly surged to their highest intraday level since 2022.
Behind the Slide
Two factors drove the reversal:
- Strategic reserves: Hopes that the world's biggest economies — the U.S., EU, Japan, South Korea, and India — will coordinate a release from strategic petroleum reserves (SPR) to offset supply disruptions from the Gulf.
- Trump signals: Comments from President Trump suggesting a limit to the duration of hostilities provided markets with a potential timeline for the conflict's end.
Market Confusion: The Navy Tanker Escort Episode
Oil's decline helped boost stocks around the world, though U.S. indexes trimmed gains and crude pared declines after Energy Secretary Chris Wright deleted a social-media post saying the U.S. Navy had successfully escorted a tanker through the Strait of Hormuz. The Navy is not currently escorting commercial ships through the Strait, according to the White House and a spokesman for U.S. Central Command.
The S&P 500 was recently up less than 0.1%. Caterpillar added around 2.5%, boosting the Dow Jones Industrial Average by 0.2%. Treasury yields edged lower. The dollar weakened. Gold rose around 2.6%.
Saudi Aramco Warning
Saudi Aramco sounded a note of caution, with its CEO warning of "catastrophic consequences for oil markets" the longer the disruption to energy flows continues. Gulf supply disruptions already account for an estimated 2–3 million barrels per day of reduced throughput through the Strait of Hormuz.
Impact on Indian Economy
For India, which depends on the Gulf for over 50% of its crude imports, even a $90 Brent price is significantly elevated versus the $75 level that underpinned India's FY26 budget assumptions. The petroleum ministry has initiated emergency consultations with state-run refiners IOCL, BPCL, and HPCL on managing the supply shortfall.
