Oil prices edged lower on Friday morning but remained above USD 105 per barrel, as investors assessed supply risks in the Middle East and possible US steps to ease restrictions on tankers operating in the global oil market.
Brent crude futures fell 41 cents, or 0.39 per cent, to USD 105.51 per barrel by 0012 GMT, while US West Texas Intermediate (WTI) crude futures declined 54 cents, or 0.55 per cent, to USD 97.43 per barrel.
Brent crude was trading at USD 105.34 per barrel, up 2.14 per cent over the past week, while WTI crude stood at USD 97.31 per barrel, gaining 7.35 per cent during the same period.
Elevated oil prices are also putting pressure on India’s external trade position. According to an ICICI Bank Global Markets research report, India’s balance of payments (BoP) is turning positive, but the surplus is likely to remain below earlier expectations due to higher oil prices and a widening non-oil, non-gold trade deficit.
Oil prices today: Brent above $105 as Middle East supply risks rise
Brent crude traded above USD 105 per barrel on Friday and was on track to record a weekly gain amid concerns over oil supplies from the Middle East.
The US Central Command confirmed that a Singapore-flagged container ship that sank in the Strait of Hormuz earlier this week was hit by an Iranian projectile. The incident added uncertainty over the recovery of physical oil flows and contributed to tanker rates reaching record highs.
Rising tensions between Saudi Arabia and Iran-backed Houthi forces in Yemen also heightened concerns over potential supply disruptions.
Meanwhile, the International Energy Agency (IEA) agreed to proceed with the release of the remaining 100 million barrels of oil from a coordinated intervention launched in March, following lobbying efforts by US officials.
Data from the US Energy Information Administration (EIA) showed that US crude inventories fell by 8.6 million barrels last week. This was the largest weekly decline since February.
Brent crude underperformed WTI during the week as lower shipping costs for US crude supported demand for American oil.
India’s BoP surplus likely to remain below expectations
India’s balance of payments position has improved, supported by higher banking capital inflows and an improvement in foreign direct investment (FDI). However, elevated crude oil prices and a widening non-oil, non-gold deficit are expected to weigh on the country’s external accounts.
According to the ICICI Bank Global Markets report, India’s merchandise trade deficit is likely to increase due to higher oil prices and the expansion of the non-oil, non-gold deficit.
“This year’s trade deficit is bound to go up given elevated oil prices, which have averaged USD 92/bbl. along with the fact that the non-oil, non-gold deficit is rising,” the report said.
Assuming crude oil prices average around USD 95 per barrel, India’s goods trade deficit is estimated at USD 388 billion. This would translate into a current account deficit (CAD) of USD 57 billion, equivalent to 1.4 per cent of gross domestic product (GDP).
The report noted that higher banking capital inflows and improving FDI were positive developments. However, outflows through foreign portfolio investment (FPI) and external commercial borrowings (ECB) were likely to offset some of these gains.
“Hence, while BoP is turning positive, it is likely to be lower than earlier expectations,” the report said.
Current account deficit widens to $18.3 billion in April-August
Data released by the Reserve Bank of India (RBI) showed that India’s current account deficit narrowed slightly to USD 5.2 billion in August 2026, compared with USD 6.1 billion in August 2025.
However, the cumulative current account deficit widened to USD 18.3 billion during April-August 2026, compared with USD 12.8 billion in the corresponding period of the previous year.
The capital account recorded a substantial improvement during the five months. Capital inflows reached USD 76 billion between April and August 2026, compared with USD 12 billion in the same period last year, primarily due to banking capital inflows.
Foreign direct investment inflows also improved, while short-term credit increased to USD 5.5 billion from USD 1.4 billion.
These inflows were partly offset by foreign portfolio investment outflows of USD 3.7 billion and external commercial borrowing outflows of USD 28.3 billion.
Consequently, India’s cumulative balance of payments recorded a surplus of USD 58 billion during April-August 2026, compared with a deficit of USD 0.8 billion in the corresponding period a year earlier.
Merchandise trade deficit widens to $30.2 billion in September
India’s merchandise exports rose 23 per cent year-on-year to USD 44 billion in September 2026. However, gross services exports declined 0.9 per cent to USD 36 billion.
Oil exports increased 32 per cent, supported by higher refinery margins, while non-oil exports grew 22 per cent. Electronics exports rose 70 per cent, and engineering goods exports increased 21 per cent.
Merchandise imports grew at a slower pace of 8 per cent to USD 54 billion. The increase was moderated by an 81 per cent decline in gold imports, although oil imports rose 31 per cent.
The merchandise trade deficit widened to USD 30.2 billion in September from USD 26.9 billion in August. The increase was driven by a higher oil deficit and a widening gap in non-oil, non-gold trade.
For the first half of the 2026-27 financial year, India’s goods trade deficit expanded to USD 178 billion from USD 157 billion in the corresponding period of the previous year.
The rise in the goods deficit, alongside elevated oil prices, remains a key factor weighing on India’s external trade position.
Rupee outlook: RBI measures likely to support domestic currency
The ICICI Bank Global Markets report said recent RBI measures would have a significant bearing on the domestic currency, maintaining a positive bias for the rupee in the near term.
However, the outlook for India’s external accounts remains dependent on crude oil prices, merchandise trade flows and capital movements.
