Indian Crude Basket Averages Nearly $120 a Barrel, Highest Since March 2012
Key Facts
The Indian crude basket averaged about $120 a barrel from October through October 26, its highest level since March 2012, when the monthly average was $123.61, according to Business Standard. The increase puts energy costs at the forefront of pressures on India, which relies heavily on imported crude. Data for the first half of fiscal year 2026-2027 show the crude import bill rose to $90.6 billion between April and September, compared with $61.9 billion in the corresponding period a year earlier. By contrast, import volumes increased by less than 1%, to 122.7 million tonnes. Financial Express said the divergence between spending and volumes links the jump in the bill to higher purchase costs rather than an increase in import volumes.
India’s Petroleum Planning and Analysis Cell defines the crude basket as a blend derived from sweet dated Brent and the sour Oman and Dubai crudes. The indicator matters because it reflects a mix of crude grades imported by India, rather than the price of a single type of oil. The country’s reliance on crude imports stood at 88.1% in April and September, according to Financial Express. Domestic production also fell to 13.7 million tonnes, from 14.2 million tonnes in the corresponding period a year earlier. Lower domestic output, alongside high reliance on imports, leaves the oil bill exposed to changes in the cost of imported crude.
The pressure is also evident in oil marketing companies’ accounts, which continue to face a cost-recovery shortfall despite fuel price increases in May, according to Business Standard. The newspaper cited an estimate by ICRA that the diesel cost-recovery shortfall was about 20 rupees a litre in October. The estimate on September 23 was 9 rupees a litre for diesel and 8 rupees a litre for petrol. The estimated diesel shortfall has therefore nearly doubled since the September estimate, while the petrol estimate stood at a lower level at that time. The figures leave marketing companies under pressure to absorb part of fuel costs even after domestic prices were adjusted in May.
On economic activity, India’s preliminary HSBC composite purchasing managers’ index rose to 56.7 points in October, from 55.9 points in September, marking the fastest expansion since June, according to Financial Express. The reading was supported by strong activity, while cost pressures eased in the month’s survey. HSBC said input cost inflation slowed for a seventh consecutive month, reaching its lowest level in about a year. Selling price inflation also eased to its weakest pace since March 2025. The indicators present a mixed picture: activity is expanding, but continued increases in crude could add pressure on companies if they feed through to production costs and prices.
The rise in crude comes amid a more inflation-sensitive environment, after the Reserve Bank of India raised its consumer price inflation forecast to 5.2% from 5%, Business Standard reported on October 26. The bank also raised the repo rate by 25 basis points to 5.5%, as the Monetary Policy Committee shifted to a calibrated tightening stance. Bank of Baroda’s chief economist said crude prices remaining high over the next three months could first show up directly in wholesale price inflation. He added that manufacturers would bear higher input costs. That makes energy price developments important for the trajectory of production costs, alongside monitoring activity and inflation indicators.
The central bank has taken steps to meet state-owned oil companies’ foreign currency needs, beginning on October 12 to meet the full daily dollar requirements of Indian Oil, Bharat Petroleum and Hindustan Petroleum through a special window, according to Economic Times. The newspaper estimated that the three companies may need about $200 million a day for crude and petroleum product imports, based on August trade data. That month, India imported about 23 million tonnes of crude worth $11.7 billion. The central bank said dollar sales to the companies would be made through designated banks at prevailing market rates. The mechanism allows the companies to meet their foreign currency needs without competing for dollars in the spot market.