Crude oil slips to $68; Emkay flags shift to clean energy, stable supply"

The conflict-driven risk premium-estimated between US$ 10-15-has largely dissipated, with no signs of supply disruptions through the strategic Hormuz Strait or within Iran.

Brent crude prices have cooled to $68 a barrel after briefly breaching the $80 mark during the Israel-Iran conflict, as geopolitical tensions ease and global oil markets rebalance. According to Emkay Wealth Management, the retreat reflects the fading of a $10–15 risk premium, stabilizing OPEC+ supply moves, and a growing global shift toward cleaner energy sources.

The brief but sharp rally in crude was largely driven by geopolitical risk premiums, which analysts at Emkay estimate ranged between $10–15 per barrel. With the absence of direct disruptions in key oil routes—particularly through the Hormuz Strait, a vital chokepoint for global oil supply—the tension-driven premium has largely unwound.

OPEC+, the influential oil producers’ bloc, has stepped in as a stabilizing force by easing supply curbs and promising to gradually ramp up production. Iraq, a key supplier to the U.S., continues to maintain uninterrupted oil exports, further supporting the global supply chain.

These developments have collectively helped anchor oil prices in a range-bound zone, easing fears of runaway energy inflation that rattled global markets earlier this year.

While supply-side pressures ease, the demand landscape is undergoing a structural shift. The report notes that the European Union’s decarbonization agenda—with targets to push renewable and nuclear energy to 70% of its total mix over the next decade—is gaining serious traction. Supported by investments of over $300 billion, this energy transition could curb long-term crude demand, especially in advanced economies.

This trend adds another layer of moderation to oil prices, as clean energy adoption intensifies across the globe.

In the U.S., crude stockpiles rose by 3.8 million barrels as of June 25, bringing the total inventory to 419 million barrels. This build-up suggests that near-term demand may be softening, or supply outpacing consumption—both of which tend to cap price surges.

 

What’s Next for Oil Prices?

According to Emkay’s analysis, Brent crude is expected to trade within a technical ceiling of $70–$75 per barrel, barring any fresh geopolitical disruptions. With key variables—Middle East tensions, OPEC+ strategy, U.S. inventories, and green energy policy—all appearing stable or favorable, a new price equilibrium is likely taking shape.

"Unless new shocks emerge, oil prices are likely to remain range-bound," the report notes.

What this means for investors & consumers

For Indian investors and consumers, this cooling in crude prices could have multiple positive ripple effects:

Lower inflationary pressure, especially on fuel and transportation costs

Stable input costs for oil-import-heavy industries (aviation, paints, chemicals)

Improved trade balance and lower fiscal burden on fuel subsidies

Equity market relief, particularly in sectors like FMCG, auto, and logistics

For investors in energy-linked mutual funds or ETFs, cautious rebalancing may be wise, given the evolving price ceiling.