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The pressure extends beyond headline crude prices. Brent crude has climbed above $110 per barrel, while dated Brent has touched $140, according to an Axis Bank Research report dated October 23. Taneja said the actual cost paid by Indian refiners can be significantly higher than the price quoted in global markets because of rising freight, marine insurance and tanker-manning costs.
“When you look at the landed price, depending on the country, company and region, it is at least $20 more than the headline price,” he said. For India, the additional cost could be around $25-27 per barrel, depending on the refiner and source of crude.
Crude oil import basket
India’s average crude oil import basket price rose nearly 4% month-on-month to $120.46 per barrel in October through October 26, its highest monthly average since March 2012. The surge from $116.77 per barrel in September comes amid escalating West Asia tensions, which have increased geopolitical uncertainty, marine insurance premiums and freight rates.
On October 26, the Indian crude basket price touched $123.72 per barrel.
Meanwhile, global crude prices have risen around 80% in 2026, with Brent trading at $114.6 per barrel, WTI at $100.9 and Murban at $117.7 on Tuesday evening. Rising shipping costs, marine insurance premiums and geopolitical tensions in West Asia have further increased the cost of importing crude oil.
Who is bearing the burden of expensive oil?
The Centre, state governments, public-sector oil companies and the RBI are collectively absorbing the oil shock. Axis Bank Research, in a report on October 23, estimated this support at 1.7% of GDP, assuming average crude prices of $100 per barrel, with every $10 increase adding another 20 basis points of GDP to the burden if retail fuel prices remain unchanged. India’s crude oil import bill rose 46.3% year-on-year to $90.6 billion during April-September.
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Taneja warned that the government and oil companies cannot shield consumers indefinitely without damaging their financial health. He also highlighted the need for India to diversify crude supplies and invest in overseas oil and gas assets to secure long-term supplies. With geopolitical tensions in West Asia likely to keep markets volatile, he said the coming months would remain challenging for India’s energy security.
What happens next?
Axis Bank Research estimates that fiscal measures, including higher duties and the Economic Stabilisation Fund, could create room equivalent to 0.6% of GDP, helping limit the Centre’s fiscal slippage to 20-30 basis points of GDP in FY27. However, prolonged high crude prices could force a greater share of the cost to be passed on to consumers.
Taneja said oil prices remain heavily influenced by geopolitics rather than supply-demand fundamentals alone. He also stressed the importance of expanding India’s crude and LPG storage capacity and strengthening its shipping fleet, as high freight and insurance costs are eroding the benefits of discounted oil.
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For consumers, any increase in petrol and diesel prices could raise commuting and transport expenses, with higher freight costs potentially feeding into the prices of essential goods. The extent of the impact will depend on how long crude prices remain elevated and how much longer the government and oil companies can absorb the additional costs.
