Oil prices steadied on Thursday, September 3, 2026, after a recent rally. Brent crude futures fell 0.13% to $95.50 a barrel, while U.S. West Texas Intermediate (WTI) crude edged up 0.04% to $91.05 a barrel. This stabilization came as President Donald Trump stated that renewed US military actions against Iran would be short-lived, easing some fears of prolonged disruption. However, both benchmarks have remained volatile this week following intensified military strikes between the United States and Iran, which raised concerns about oil supplies from the region.
The U.S.-Iran conflict has kept oil markets on edge, with the latest attacks representing the most significant exchange of fire since July. This has introduced a fresh layer of uncertainty into an already fragile market, contributing to a substantial geopolitical premium in crude prices. Despite Trump's comments offering some hope for de-escalation, investors remain wary of a renewed flare-up. Analysts expect geopolitical developments to continue driving crude prices in the near term, with a Reuters poll suggesting Brent could average $85.08 a barrel in 2026, but persistent Middle East supply risks could keep prices above $80.
The Strait of Hormuz remains a critical flashpoint, a crucial transit route for crude and liquefied natural gas shipments. While shipping activity through the strait has slowed significantly, with only four commodity vessels crossing on Wednesday compared to a 10-day average of around 13, the U.S. reported that 17 million barrels of oil transited the strait on Monday, the highest volume since the conflict began. Iran has also expanded its list of vessels deemed non-compliant, subject to potential fines or detention. These conflicting signals highlight the uncertainty surrounding the actual extent of supply disruption.
For India, elevated oil prices are a significant concern due to the country's heavy reliance on imports. A sustained rise in international crude prices could increase the import bill, pressure the rupee, and complicate the inflation outlook. Higher crude prices could also weigh on Indian equities by raising input costs for fuel-intensive businesses, impacting corporate margins. Sectors like oil marketing companies, airlines, paints, and chemicals are particularly vulnerable. Indian markets, including the Nifty 50 and Sensex, have already experienced pressure from rising crude and global bond yields, with both losing around 1% over the past three sessions.
