The price of the Indian Crude Oil Basket (which measures the cost of oil imported by the nation) has averaged to US$ 59.92 per barrel, down from US$ 60 per barrel in December. As per the Petroleum Planning and Analysis Cell, this drop is a first-time move since February 2021.
SBI’s research stated, “The Indian basket is anticipated to weaken in accordance with anticipated global trends,” further adding, “Our base case is US$ 50 per barrel or even lower by June 2026.” The report also mentioned how prices could fall to US$ 53.21 per barrel by March. This decline in crude prices can indirectly affect retail fuel prices.
The Indian Crude basket consists of sweet grades (represented by Brent Dated), which are processed in Indian refineries, and sour grades (an average of Oman and Dubai).
Since India imports over 88% of its crude oil, lower prices relieve pressure on the country’s import bill. India’s annualized import expenditure decreases by about Rs. 13,000 crore for every US$ 1 per barrel. In the most recent fiscal year, the country bought US$ 161 billion worth of crude.
Higher discounts and lower prices have already contributed to the current fiscal year’s import bill getting reduced to US$ 80.9 billion as of November.
Geopolitical risks, particularly the turmoil in Venezuela, have pushed oil prices up to a one-week high, thus neutralizing the worries about the IEA’s prediction of a 2026 supply glut. Brent increased to US$ 62.08, and WTI to US$ 58.
According to analysts, there may be short-term supply tightness, but prices are likely to soften over time, as Saudi Arabia’s price cuts for Asia signal ample future supply.
The situation in Venezuela is still not going to affect supply, even though there might be large reserves while the US sanctions get imposed.