Global Oil Crisis: Brent Hits $106.50 as US-Iran Tensions Shutter Hormuz; Fuel Hike Looms in India
Global energy markets are witnessing a shift as Brent crude prices slipped to $106.64 per barrel on Wednesday. The decline follows a commitment from the OPEC+ alliance to increase production by 188,000 barrels per day starting in June 2026. Despite this cooling in international benchmarks, India's state-run oil marketing companies (OMCs) continue to face severe financial strain, with daily losses estimated at ₹1,000 crore due to high global averages and domestic price freezes.
Global energy markets are witnessing a shift as Brent crude prices slipped to $106.64 per barrel on Wednesday. The primary driver behind today's price softening is a decisive move by the OPEC+ alliance. Major producers, including Saudi Arabia and Russia, met virtually to review market conditions and reaffirmed their commitment to stability through a gradual increase in supply. Starting in June 2026, the group will implement a production adjustment of 188,000 barrels per day (bpd).
Saudi Arabia and Russia are set to account for the lion's share of this adjustment, with each nation adding 62,000 bpd. Iraq will contribute 26,000 bpd, followed by smaller increases from Kuwait, Kazakhstan, and Algeria. This marks the beginning of a phased rollback of the voluntary cuts introduced in April 2023, signaling to the markets that supply is slowly returning to meet global demand.
Global Benchmarks and Indian Pump Rates
International prices have responded to the supply outlook with a downward bias. Brent crude is currently trading at $106.64, down from its May high of $113.63. Meanwhile, WTI crude is hovering near the $99 mark. This cooling trend offers some relief from the $115 peaks seen earlier in the quarter, though prices remain significantly higher than the $65 levels recorded at the start of the year.
In India, fuel prices remain largely stagnant at the pump despite the global volatility. In New Delhi, petrol continues to retail at ₹94.77 per litre, while Mumbai maintains a higher rate of ₹103.50. Other metros like Hyderabad and Kolkata are seeing prices hold steady at ₹107.46 and ₹105.41, respectively. The government has managed to avoid price hikes for over four years, even as the global basket surged by over 75%.
OMCs Facing Rs 30,000 Crore Monthly Loss
The gap between global procurement costs and domestic retail prices has created a massive fiscal challenge. Union Petroleum Minister Hardeep Singh Puri recently highlighted that Indian oil marketing companies, including IOCL, BPCL, and HPCL, are losing approximately ₹1,000 crore every single day.
Total monthly under-recoveries for these state-run firms are estimated at nearly ₹30,000 crore. This figure excludes additional losses on Aviation Turbine Fuel (ATF) and LPG. While a recent excise duty cut of ₹10 per litre helped cushion the blow, it has also resulted in a revenue loss of ₹14,000 crore per month for the government. With the West Asia crisis still disrupting shipping through the Strait of Hormuz, officials remain in a "cautious and vigilant" mode regarding future price adjustments.
Published By : Shourya Jha
Published On: 13 May 2026 at 11:53 IST