As conflict escalates once again in the Middle East, the impact is being felt on crude oil prices. On Wednesday, Brent crude crossed the $100 mark, touching $101.1 per barrel, while WTI crude reached $96.24. Domestic oil companies are now under pressure due to these rising rates; despite the surge in international crude oil prices, fuel rates in the domestic market remain unchanged, causing Indian oil retailers to incur losses of ₹5 per litre on petrol and ₹23 per litre on diesel. Experts have warned that the rise in oil prices will not only increase the country’s import bill but also exacerbate the inflation situation. Prashant Vasisht, Senior Vice President and Co-Group Head (Corporate Ratings) at ICRA Limited, stated that Brent crude prices have surged past $100 due to escalating tensions between Iran and the US. The price for the Indian crude oil basket has risen to approximately $109. Under these circumstances, Indian oil marketing companies are incurring losses of ₹5 per litre on petrol, ₹23 per litre on diesel, and ₹200 per domestic LPG cylinder.
As the world’s third-largest oil importer, India sources over 88% of its oil requirements from abroad; consequently, it will bear the brunt of the rise in crude oil prices. During April-July of this year, the country’s oil import bill surged by over 56% to reach $63.4 billion, up from $40.5 billion during the same period last year; however, the volume of imported oil remained steady at 81 million tonnes. According to Vashistha, crude oil prices will rise further if geopolitical tensions escalate. Sectors dependent on oil—such as aviation, paints, tyres, chemicals, logistics, and FMCG—will face margin compression, and inflationary pressures will mount. Meanwhile, the likelihood of the RBI cutting interest rates will diminish; the central bank may keep rates unchanged in the upcoming review meeting.
