Brent's 25% August Rally Holds Above $106 as India's Fuel Losses Deepen
ICE Brent front-month near four-month highs tightens the squeeze on Indian state refiners absorbing losses of up to Rs 23 per litre on diesel.
ICE Brent crude front-month eased 0.47% to $106.94 per barrel in early Monday (2026-09-14) trading, still more than 25% above where it started August, after pushing to a four-month peak of $108.77 on Friday (2026-09-04) as West Asia tensions escalated further. The retreat from that high is modest.7,8
For India, persistence above $100 is more consequential than any single daily reading. The country imports more than 85% of its crude oil requirement, meaning a sustained rally feeds directly into the import bill, retail fuel subsidies, fertiliser costs and transport prices, the Financial Express reported. State oil marketing companies are running losses of roughly Rs 5 per litre on petrol and Rs 23 per litre on diesel at current price levels, ABP Live reported — losses that compound quickly when relief fails to materialise.5,6
The surge from early August was not linear. Brent had retreated to around $97-98 in late May as markets began pricing in a possible US-Iran peace framework that could eventually restore Iranian crude exports, CNBC TV18 reported. That optimism proved short-lived. Fresh threats from Donald Trump during Iran-US negotiations on Monday (2026-06-15) pushed Brent up as much as 2.2% at the open, the move reflecting a reassessment of geopolitical risk with no confirmed supply change behind it, Goodreturns reported. Earlier, on Monday (2026-05-11), Brent climbed to $105.13 per barrel after Trump described ceasefire efforts as "on massive life support," OnIndia reported.2,4,1
The Strait of Hormuz remained under pressure throughout the conflict, Moneycontrol reported. Oil supply fell from the region, yet prices earlier in the summer stayed capped partly because Chinese buyers pulled back — a demand retreat that helped offset the supply losses, Moneycontrol reported in June. That picture has since shifted. Traders told ABP Live that China has been increasing purchases as global inventories decline, reinforcing the demand side of the rally.3,6
The speed of China's return makes the market harder to read. Earlier in 2026, Brent touched nearly $120 during the peak of the West Asia crisis before correcting sharply. The current level, around $107, sits between those extremes and reflects a market that has repriced geopolitical risk upward without yet retesting the year's highs.2
US-Iran negotiations, which had threatened to break down in mid-June, were continuing despite a tense start, according to people familiar with the discussions cited by Goodreturns. A credible deal returning Iranian barrels to market would pressure prices lower; a collapse or escalation near the Strait would likely test those 2026 highs again.4
Refined product markets complicate the cost picture further. Jet fuel margins stayed significantly above pre-conflict levels even when Brent was retreating, the Financial Express noted, indicating tighter conditions in the product barrel than crude alone implied. That premium creates additional cost pressure for airlines and industrial users across Asia.5
Wood Mackenzie projected ICE Brent front-month to average around $92 per barrel across 2026 as a whole, reflecting the earlier price spike, before easing to approximately $78 per barrel in 2027 on an assumption of supply normalisation. Closing that gap from the current $107 requires either diplomatic progress or a softening in Chinese demand momentum, and neither looks imminent.5
India's government faces a tightening calculation: revise retail fuel prices and risk political backlash ahead of state elections, or hold prices steady and let public sector refiner losses accumulate. The Indian Express reported that the concern in New Delhi is not any single day's reading but how long Brent stays above $100 — and that clock has already been running for weeks.8