Brent crude, the benchmark for half the world’s oil trade, was trading at $98.26 per barrel at 6.15 pm IST on Friday, 16 per cent lower than the highest level of $118 per barrel witnessed on October 30, marking its biggest weekly percentage drop since 2020.
This comes after the latest midterm election losses of US President Donald Trump’s Republican Party raised hopes of a de-escalation in the US-Israeli war on Iran. The downward trajectory has raised hopes of major relief for India’s oil import bill, inflation and the finances of its state-run oil firms.
“It is difficult to predict the trajectory of crude price movement, but lower prices are always better for India, given the fact that we are a huge importer,” said Prashant Vasisht, senior vice-president and co-group head, corporate ratings, at ratings agency ICRA Ltd.
In volume terms, India’s crude oil imports remained flat at around 122 million tonnes in the first half of the current financial year (2026-27), but the value of imports at $90.6 billion during the period was 47 per cent higher than the cost of imports recorded in the same period last financial year.
“The other aspect of the US mid-term election results is that democrats are less seen to favour reciprocal tariffs generally. To that extent, markets are factoring in more certainty that India’s high Russian oil purchase may not invite tariff action from the US. Given the high share of Russian crude in India’s oil imports, at least on the tariff front India can breathe easy,” Vasisht said.
Experts believe that for Indian oil marketing companies (OMCs), crude at even the $94-per-barrel level observed earlier this week is not lucrative, and the fact that Brent has again risen above $98 per barrel is damaging for them at a time when domestic retail fuel prices remain capped.
“Their under-recoveries on Diesel and Petrol stood at Rs 12 per liter and Rs 9 per liter, respectively, in October. In addition, they are suffering around Rs 230-245 loss on every LPG cylinder. So, it is still a bad scenario for the OMCs as their financial position is still not in the positive territory. Also, the OMCs have their Gross Refining Margins (GRMs) capped due to the freeze in retail rates,” Vasisht said.
Going forward, crude price movements will depend on how geopolitical developments unfold. Crude prices had remained elevated recently when the US-Iran diplomatic talks did not succeed, even while the bulk of crude was passing through the Strait of Hormuz. In addition, the Houthis have renewed attacks on Saudi oil infrastructure.
However, experts say that if prices come down going forward, the OMCs will gain because they are already incurring huge under-recoveries on petrol, diesel and LPG sales. Further, if the US-Iran war de-escalates, India may look at increasing oil imports from West Asia, given its geographical proximity.
“For India, the cost of freight involved in bringing crude from West Asia stands at around 40-70 cents per barrel as compared to $2.5 to $4 per barrel for US. India was already importing 35-40 percent of its crude from West Asia prior to the conflict,” Vasisht said.
However, the strategic reserves of many global companies have come down recently. Therefore, after the US-Iran war is resolved, they will look at replenishing their reserves and building buffers by tapping into West Asian crude, leading to continued high crude prices globally.
