Global crude markets have remained surprisingly stable following a major supply disruption, thanks to demand reduction, increased non-OPEC+ production, and new shipping routes that bypass regional tensions, according to experts.
Global crude markets have stayed far calmer than many traders feared after one of the biggest supply shocks in decades, as a mix of weaker demand, higher output outside the Gulf, flexible shipping routes and inventory releases helped prevent a sharper spike, according to Kelly Xu, a commodity and energy strategist at Alpine Macro.
Speaking to businessline, Xu said the first and most important shock absorber was demand destruction, meaning high prices and economic caution curbed consumption before the market could overheat. She also pointed to stronger production from non-OPEC+ suppliers, including the United States, Brazil, Canada and Argentina, which helped offset some lost Gulf barrels. That argument fits with the International Energy Agency’s assessment that global supply has adjusted through reserve releases, alternative export routes and quicker refinery adaptation.
Xu said the market has also benefited from workarounds that reduce dependence on the Strait of Hormuz, where even limited disruption can rattle energy flows. Pipeline links that bypass the chokepoint, together with ship-to-ship transfers in the Gulf of Oman, have softened the impact of regional tension. Analysts at the Centre for Economic Policy Research have noted that geopolitical oil shocks often hit harder than ordinary supply cuts because they trigger precautionary inventory behaviour and broader macroeconomic strain, but this episode has so far been cushioned by emergency measures.
For India, the muted rise in global crude has so far limited the damage to inflation and public finances. Xu said gradual changes in domestic fuel prices have helped contain the pass-through to consumer prices, while the government has relied more on tax adjustments, measured retail changes and targeted support than on broad fuel subsidies. The Council on Foreign Relations has warned that oil price volatility can quickly widen budget deficits and force policy shifts, but Xu said the lack of an extreme spike has given New Delhi some breathing room for now.
Xu also argued that Indian refiners have not lost their leverage when buying Russian oil. In her view, bargaining power depends less on the level of global crude prices than on Russia’s need to place barrels, the availability of rival buyers and sanctions pressure. While discounts on Russian crude have narrowed as Moscow has rerouted exports, India remains a key customer, and softer Chinese demand has reduced competition for those barrels.
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