Brent Slips Below $104 as Saudi Pipeline Restart Hopes Cool War Premium; MCX Crude Ends Week at ₹9,688, Petrol Prices Frozen

Mumbai, Sept 19: Global crude oil markets ended the week sharply lower after a mid-week surge to four-month highs, as signals that Saudi Arabia was restoring flows through its damaged East-West pipeline drained the geopolitical risk premium that had driven prices above $109 per barrel.  

Brent crude futures for November delivery settled at $104.82, down 0.95% on the final trading day, while the September crude oil contract on the Multi Commodity Exchange traded at ₹9,688 during initial Friday trading, declining 0.72% from the previous close of ₹9,758. Petrol and diesel prices across India remained completely unchanged for the entire week, with Delhi petrol at ₹102.12 per litre and diesel at ₹95.20 per litre. 

Brent Retreats 0.95% to $104.82 as $109 Peak Fades on Saudi Supply Signals 

Brent crude futures for November delivery closed the week at $104.82 per barrel, declining $1.01 or 0.95% on the final trading day. The global benchmark had surged to a four-month high of approximately $109 earlier in the week before the rally lost momentum.  

The weekly opening on Monday, 14 September, saw prices holding firm above $107 as markets digested the aftermath of the previous week’s attacks on Saudi Arabia’s East-West pipeline. US West Texas Intermediate crude for October delivery settled at $101.91 per barrel, down 52 cents or 0.5% on the final trading day. The Brent-WTI spread stood at approximately $2.91 per barrel. 

Also Read: How to invest in crude oil 

The week’s defining trigger was the easing of supply fears. Saudi Arabia was loading additional crude via Oman’s Sohar port through ship-to-ship transfers and targeting restoration of about half the East-West pipeline’s capacity within days, with full capacity expected in approximately six weeks.  

US Energy Secretary Chris Wright indicated that crude could begin flowing through the pipeline again within days, further calming markets. Both benchmarks had declined by approximately $3 on Wednesday and Thursday as the supply premium unwound. 

MCX Crude Falls 0.72% to ₹9,688 as Open Interest Shrinks, Volume Dips 

The September crude oil futures contract on the Multi Commodity Exchange traded at ₹9,688 per barrel during the initial hour of Friday trading against the previous close of ₹9,758, down ₹70 or 0.72%. The October contract traded at ₹9,264 against its previous close of ₹9,332, declining ₹68 or 0.73%. The September contract had reached a weekly high of ₹10,238 earlier in the week before the correction set in.  

Open interest in the September contract declined by 13.77% while trading volume dropped by 11.38%, reflecting reduced participation as the contract approaches its 21 September expiry. The MCX iCOMDEX Crude Oil Index recorded a marginal gain of 0.04% to close at 15,208.25. 

The translation of international crude movements into MCX prices was complicated by currency dynamics. The Indian Rupee opened the week under pressure but staged a recovery, with the USD/INR pair touching an intraday high of 95.71 before the rupee settled unchanged at 95.89 against the dollar on Friday. The rupee had declined 150 paise or nearly 1.5% in the preceding eight sessions since the closing level of 94.43 recorded on 4 September, making the recovery on Friday particularly significant for import cost calculations. 

Indian Crude Basket Hits $131.19, a Five-Month High as Russian Supply Fears Mount 

India’s crude oil basket surged to $131.19 per barrel on Tuesday, its highest level since 23 March 2026, when it stood at $157.04 per barrel. The month-to-date average Indian basket price in September, till September 15, rose to $111.71 per barrel, up almost 24% from the August average of $90.19. September’s average was the highest since April. 

The spike in India’s import costs stemmed from two converging factors. First, the impending threat of tariffs under the Lindsey O Graham Sanctioning Russia and Iran Act of 2026, which empowers the US President to impose tariffs of up to 100% on buyers of Russian oil and gas, threatened India’s access to discounted Russian crude. India imported Russian crude worth $28.32 billion in the current fiscal year through July.  

Second, the closure of Saudi Arabia’s East-West pipeline disrupted approximately 4 million barrels per day of alternative supply routes, leaving Indian refiners scrambling for replacement cargoes costing $130-140 per barrel. As of Wednesday 1830 hours, Brent was trading at $107.6 per barrel, WTI at $104.2 and Murban at $124. 

Petrol Stays Frozen at ₹102.12 in Delhi as Export Levy Cut Offers OMC Relief 

Petrol and diesel prices remained completely unchanged across all major Indian cities throughout the week, despite Brent crude trading above $108 per barrel midweek. In Delhi, petrol continued to be sold at ₹102.12 per litre and diesel at ₹95.20 per litre. Mumbai residents paid ₹111.21 for petrol and ₹97.83 for diesel.  

Kolkata’s diesel rate was ₹99.82, while Chennai stood at ₹107.94 for petrol and ₹99.55 for diesel. Hyderabad recorded the highest petrol price among major cities at ₹115.69 per litre, while its diesel price was ₹104.23. The stability in retail prices contrasted sharply with the volatility in global benchmarks. State-run oil marketing companies have maintained petrol and diesel prices unchanged since the end of May 2026, absorbing the impact of rising crude costs rather than passing them on to consumers.  

The government’s decision to reduce the windfall tax on fuel exports, effective 16 September, provided a fiscal cushion to OMCs. The levy on diesel exports was cut to ₹20 per litre from ₹25 per litre, while the tax on petrol exports was reduced to ₹0.50 per litre from ₹1.50 per litre. The windfall tax on aviation turbine fuel exports was lowered to ₹15 per litre from ₹19 per litre. However, the change applied to fuel exports and did not represent a direct cut in domestic petrol or diesel prices. 

Rupee Closes Flat at 95.89 as Oil Retreat and Equity Inflows Cushion Import Bill 

The Indian Rupee pared initial gains to close unchanged at 95.89 against the US Dollar on Friday, with the currency opening at 95.75 and touching an intraday high of 95.71 before settling at its previous closing level.  

The rupee’s recovery was supported by a correction in oil prices, which reduced dollar demand from importers, and positive momentum in domestic equity markets. The local unit had ended 2 paise higher on Thursday after declining 150 paise or nearly 1.5% in the preceding eight sessions since the closing level of 94.43 recorded on 4 September. The rupee’s fall was capped as crude prices slid below the $104 per barrel level and US bond yields eased after the US Federal Reserve hiked interest rates by 25 basis points.  

India, which imports over 85% of its crude requirements, benefits from lower oil prices through a reduced import bill and improved current account dynamics. The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.02% lower at 99.97. Foreign Institutional Investors offloaded equities worth ₹3,208.76 crore on a net basis on Thursday. 

OPEC+ Holds October Output at September Levels, First Pause Since April 2026 

The seven major OPEC+ producers, including Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman, decided on 6 September to maintain October crude production at September levels, marking the first pause in their output expansion cycle since April 2026.  

The decision, announced after a virtual meeting, reaffirmed the group’s commitment to market stability amid escalating geopolitical tensions in the Middle East. Russia’s quota in October 2026 will stand at 9.949 million barrels a day, Saudi Arabia’s at 10.478 million barrels a day, and Iraq’s at 4.431 million barrels a day. The overall OPEC+ quota for October, minus compensations, will stand at 31.01 million barrels per day.  

This production freeze removed approximately 188,000 barrels per day of anticipated additional supply from the market, providing underlying support to crude prices during the week. The next OPEC+ meeting will be held on 4 October. 

Saudi Pipeline Attack  Triggers Supply Shock Before Partial Restoration 

The single most significant trigger for the week’s price action was the drone attack on Saudi Arabia’s East-West pipeline, which damaged three pumping stations and threatened to cut off nearly 4% of global oil supply. The pipeline, which transports crude from the Persian Gulf to the Red Sea port of Yanbu, is critical for bypassing the Strait of Hormuz. Saudi Arabia shut the pipeline as a precautionary measure after attacks targeted the pipeline in the Riyadh and Medina regions, resulting in injuries. The immediate supply shock drove Brent to four-month highs before the restoration narrative reversed the rally.  

Preliminary shipping data showed only four commodity vessels crossed the Strait of Hormuz on Thursday, compared with a 10-day average of approximately 16, highlighting the constrained physical supply environment. Saudi Arabia was also offering crude cargoes through ship-to-ship transfers off Oman’s Sohar port to compensate for the disruption. 

Monitor the MCX September crude contract’s expiry on 21 September and the October contract’s open interest build-up for directional cues. Track Saudi Arabia’s East-West pipeline restoration progress and Strait of Hormuz vessel traffic data as key supply indicators. Watch the USD/INR pair for import cost implications, and note the government’s windfall tax adjustments for refining sector margin trends. 

Source 

• https://ppac.gov.in/prices/international-prices-of-crude-oil 

• https://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm