For the first time since the US-Iran war started in February 2026, S&P Global Energy does not project West Asian crude oil production to return to prewar levels by the end of 2027. The outlook does not assume a definitive end to the US-Iran conflict, a normalization of Hormuz or a disappearance of Red Sea disruption risk from Iran's Houthi allies during that timeframe. Middle Eastern crude oil and condensate exports are now expected to average roughly 10-16 million b/d on a monthly basis through 2027, compared with about 20 million b/d before the war in January-February 2026. S&P Global Energy now expects crude oil prices broadly in an $80-$100/barrel range through 2027, with Dated Brent averaging around $90 or higher for the balance of 2026 and $86 in 2027, which is $5 higher than its earlier outlook. As per Business Standard, oil prices have moved up around 23% from $88/bbl on August 28 to cross $108/bbl levels, the highest level seen since May 2026.
Mirae Asset Sharekhan predicts average crude oil prices will stay significantly higher than previous forecasts, with Brent heading for $120 per barrel in Q4 2026 and average Brent prices for 2026 staying around $92 per barrel. The brokerage firm's analysis suggests the recent turn of events would shrink global inventories and slow global supplies. As Trump's campaign for the mid-term election intensifies, we could see news flow that could lead to a sharper correction, but that should be considered a long opportunity, as underlying supply would remain tight for at least six months, said Mohammed Imran, research analyst at Mirae Asset Sharekhan. The forecast follows an earlier call Ghosh made in mid-August, when he predicted oil would cross $100 per barrel — a level it has since surpassed, trading around $108 per barrel. Ghosh emphasized that the rally is mainly geopolitical rather than driven by demand-supply gaps, pointing out that the International Energy Agency had forecast prices near $60 per barrel in February before the conflict pushed them sharply higher.
Global oil balance is tightening significantly as multiple supply disruptions converge across key regions. Saudi Arabia's crude production in August fell to 6.238 million bpd, the lowest since 1990, with exports dropping to about 3 million bpd, the lowest amount in 9 years. The Strait of Hormuz closure and Gulf refinery damage continue to constrain both oil and refined products markets, with Hormuz traffic not yet normalized as claimed by White House, despite flows improving to around 6 mbpd in August. During the temporary ceasefire in July, floating storage fell dramatically from 61 million barrels in mid-June to 16 million barrels within three weeks. Russian crude runs fell from more than 5 mb/d through much of 2025 to about 4.0 mb/d in July 2026 and 3.9 mb/d in August, with refined product exports halving from about 2.3 mb/d in 2025 to roughly 1.2 mb/d in July. The loss of diesel supplies is particularly severe, with Russian diesel exports dropping to roughly 0.2 mb/d in July, compared with about 1 mb/d before the war.
The prolonged high oil prices could widen India's current account deficit, strain capital flows, and add to inflationary pressures, as warned by Business Standard. India is highly exposed to crude prices because it imports around 85% of its crude oil requirement. A sustained move toward $100 Brent can therefore affect the economy well beyond the fuel market. The impact of $100 Brent is not uniformly negative for Indian stocks - while oil-consuming sectors face higher input costs, upstream producers can benefit from higher crude realisations. The oil rally is also creating fresh problems for central banks, as higher energy prices can feed into consumer inflation, making it harder for policymakers to bring inflation back toward target levels.
SBI's Ghosh warns the rupee is likely to weaken further and could cross the psychological 96 mark against the dollar, particularly after the Reserve Bank of India's FCNR(B) window closes. He said the central bank's key task now is exchange rate management, since letting the rupee run unchecked risks becoming a self-fulfilling depreciation spiral. India's 10-year bond yield could cross the 7% mark if US Treasury yields keep climbing toward the 5% level, a scenario linked to a widening US fiscal deficit and a hawkish Federal Reserve. Ghosh noted that the US 10-year yield is now moving closer to 5%, which is going to be a record, and if it moves beyond this number, there will be repercussions for emerging economies, with India unable to remain an isolated island amid such macroeconomic upheavals.
