Crude oil prices have plummeted over the past few days, with benchmarks struggling to stay above the $60 per barrel mark. On Tuesday, prices hovered just over $60, following Monday’s settlement at the lowest level since February 2021. While this may signal challenges for oil-exporting nations, it’s a welcome development for major oil importers like India. Lower oil prices ease the pressure on dollar outflows and offer a breather to several oil-intensive sectors.
According to Abhishek Jain, Head of Research at Arihant Capital Markets, two major reasons are driving the current dip in oil prices. The first is growing anxiety over a global industrial slowdown, exacerbated by rising trade tariffs. The second is OPEC’s recent decision to ramp up production by 400,000 barrels in June. These dynamics have led to increased supply and weakened demand, creating a bearish outlook for crude in the near term.
Prashanth Tapse, Senior VP (Research) at Mehta Equities, echoed these sentiments, pointing to sluggish global demand and economic slowdowns in the US and China as critical factors weighing on crude oil prices. He warned, however, that these levels might not be sustainable. Major oil-producing nations like Saudi Arabia and Russia are likely to intervene by reducing supply to stabilize the market. If geopolitical tensions ease, crude prices could rebound to the $75–$80 range in the coming months.
On the other hand, Jain maintains that the $55–$60 zone is a solid support level. While a severe global recession could push prices lower, crude is expected to hover around current levels in the medium term in the absence of deeper economic distress.
From a market perspective, falling crude prices tend to benefit sectors heavily reliant on petroleum-based inputs. Oil marketing companies (OMCs) like HPCL, BPCL, and IOCL may see improved margins and profitability in the marketing segment. Conversely, upstream oil producers such as ONGC and Oil India could face earnings pressure due to shrinking realization rates.
Beyond OMCs, other sectors stand to gain significantly. Industries like paints, aviation, logistics, and chemicals—where crude is a direct cost driver—could witness margin expansions. According to Tapse, even FMCG and consumer discretionary segments may benefit if companies pass on the savings to consumers, enhancing demand and profitability.
Swarnendu Bhushan, Co-Head of Institutional Equities at PL Capital, believes that Brent crude may soon bounce back to around $70 per barrel. This is due to tightening sanctions on Venezuela and Iran and the natural cost floor—since the marginal cost of production itself hovers near $70. However, continued supply increases from OPEC+ and unresolved geopolitical tensions in regions like the Red Sea still pose potential risks to this outlook.
YES Securities also weighed in, noting that while some countries within OPEC+ are increasing output—led by Saudi Arabia—others are cutting back to meet quota obligations. Geopolitical factors, including Red Sea transit threats and Iranian sanctions, continue to add a risk premium to oil prices, preventing a complete collapse.
In summary, crude oil’s dip below $60 offers opportunities for specific sectors like aviation, paints, and logistics, while also supporting OMCs. However, upstream players face earnings headwinds, and any shifts in geopolitical or supply-side dynamics could quickly alter the price trajectory. Investors should closely monitor these sectors and developments for potential opportunities and risks.
