Archive · 15 Sep 2026
India’s Crude Basket Nears $130, Reviving Fiscal and Inflation Worries
India buys a lot of oil from other countries.
Oil prices have climbed quickly, with India’s oil basket reaching almost $130 per barrel on September 14.
This could make India spend much more money on imports.
It could also make fuel and other goods more expensive for people.
The government may need to spend more on fertiliser subsidies.
State-run fuel companies could lose money if pump prices do not rise enough to match their costs.
Attacks and a closed Saudi pipeline have made oil shipments more difficult and expensive.
India has enough fuel reserves for about 74 days, so the immediate problem is mainly higher costs rather than a shortage.
Analysts warn that prices staying high for several months could slow economic growth and widen India’s current account deficit.
India’s crude basket rose nearly 30% from $99.35 a barrel on September 2 to $128.70 on September 14.
Higher crude prices could increase India’s import bill, widen the current account deficit and push inflation higher.
The government’s fertiliser subsidy estimate may need another upward revision from the current Rs 2.2-2.3 lakh crore.
Oil marketing companies are facing negative fuel marketing margins, with total under-recoveries already around Rs 61,900 crore at the end of the June quarter.
Hostilities near the Strait of Hormuz, the Saudi East-West Pipeline closure and higher shipping costs are raising supply and landed-cost risks for Indian refiners.
- Who
- India, its government, oil marketing companies and Indian refiners are affected; analysts from ICRA, Kpler and other sector observers provided assessments.
- What
- India’s crude basket has surged toward $130 a barrel, increasing risks to import costs, inflation, fiscal spending, oil-company margins and economic growth.
- When
- The basket rose from September 2 to September 14; the September average reached $109.76 a barrel. Global crude prices were reported on Tuesday, while the cited economic projections cover two to three quarters or six months.
- Where
- The impact is centered on India, while supply disruptions involve the Strait of Hormuz, Saudi Arabia’s East-West Pipeline and crude shipping routes to West India.
- Why
- Renewed attacks around the Strait of Hormuz, the closure of Saudi Arabia’s East-West Pipeline, higher freight costs and elevated international crude prices have increased the cost and risk of importing oil.
- Crude basket on September 14
- $128.70 a barrel, up from $99.35 on September 2
- September average
- $109.76 a barrel, compared with $90.19 in August
- Fuel reserves
- India has around 74 days of total fuel reserves
- Fertiliser subsidy estimate
- Currently estimated at Rs 2.2-2.3 lakh crore, versus a budget estimate of Rs 1.77 lakh crore
- Oil company under-recoveries
- Around Rs 61,900 crore at the end of the June quarter
- Potential economic impact
- Crude at $130 a barrel for two to three quarters was projected to reduce FY27 growth to 6.4%, raise inflation to 5.5% and widen the current account deficit to around 3.2% of GDP
- Shipping cost
- Freight from Russia’s Novorossiysk port to West India reached $23.20 a barrel in the week to September 6