Crude oil hit the $100 per barrel mark intraday for a second straight day on Friday amid rising tensions between Iran and the US that fueled broader concerns about global energy security. West Texas Intermediate (WTI) and Brent crude oil prices were last seen trading at $89 and $97, respectively.
The rising crude oil prices are putting pressure on the import bill for India, which imports 80 per cent 85 per cent of its crude oil requirement.
Typically, elevated crude oil prices have a bearing on the RBI policy, corporate earnings and the government’s fiscal prudence.
$70-72/bbl a favourable crude oil price range crude oil for India?
Higher crude oil prices will lead to a rise in inflation in the near term. If crude oil goes above $80 per barrel, it presents a challenge to India, according to Kotak Securities’ Srikant Chauhan.
It will hamper the country’s macroeconomic stability, causing the risk of inflation to increase, he said.
Chauhan also said it will put pressure on the country’s current account deficit (CAD) and Balance of Payments (BOP). “So crude oil between $70 and 72 is favourable for India,” he concluded.
India’s Q1 oil import bill jumps 60%
India’s crude oil import bill witnessed a sharp 60 per cent surge in the first quarter of FY27, according to a report by government think tank Petroleum Planning and Analysis Cell (PPAC).
During the April-June quarter, India imported crude oil worth $49.66 billion, a significant jump from the $30.85 billion spent on crude imports during the same period in FY26.
Notably, this steep rise in the import bill has come without any major change in import volumes. In terms of volume, India imported a total of 60.481 million tonnes of crude oil during Q1 FY27, compared to 62.629 million tonnes imported during the corresponding period last year.
This means that while the physical quantity of crude oil imported remained largely stable — in fact, marginally lower than the previous year — the total billing amount rose by 60 per cent, pointing to a sharp increase in crude oil prices as the primary driver behind the ballooning import bill rather than higher consumption.
India’s daily oil consumption currently stands at around 5.5 million barrels, translating to an annual consumption of approximately 240-245 million tonnes. Despite this steady demand pattern, the cost of meeting that demand through imports has risen substantially, putting pressure on India’s import bill and, by extension, its trade balance for the quarter.
Three-month average crude oil billing price
PPAC data shows that the average crude oil import billing price stood at $114.48 per barrel in April, and then eased to $106.23 per barrel in May, and further to $83.22 per barrel in June.
However, on July 8, the US carried out another strike on Iran, and since then crude oil has surged from around $70 to $100 a barrel.
The impact of this price spike is expected to be clearly visible in the billing figures for July and August.
Can crude oil could touch $120/bbl again?
In its latest report, foreign brokerage Goldman Sachs has warned that crude oil prices could touch $120 per barrel if the West Asia crisis persists longer.
The brokerage said that if the tensions resolve, it might lead to a fall in crude oil to $80 in 2026 and $75 per barrel in 2027.
