India’s crude oil benchmark has moved well beyond the $100 mark in a matter of days. The Indian crude basket reached $106.26 a barrel on September 7, up nearly 30% from its July average of $82.04. The September average has already climbed to $100.75.
The move matters because India imports roughly 88% of its crude requirement, leaving refiners and oil marketing companies exposed to global prices.
Global oil prices are still moving higher. Brent touched $99.49 a barrel on September 9, as fresh attacks in the Middle East raised concerns about further supply disruptions.
West Asia Drives Oil Higher
The latest increase is being driven by the escalation in the US-Iran conflict and growing risks around oil shipments from the Gulf.
Attacks on Saudi cities by Iran-backed Houthi forces, US strikes on Iranian oil tankers and Iran’s attacks on a US military base in Jordan have added to concerns about energy infrastructure and shipping routes. The Strait of Hormuz remains central to those concerns.
There is an important distinction between Brent and India’s crude basket. The Indian basket is not simply the Brent price. It combines Dated Brent with the average of Oman and Dubai crude, with the mix reflecting the crude grades imported by Indian refiners.
That explains why the Indian basket can move differently from Brent on a given day.
OMC Margins Come Under Pressure
The immediate impact is showing up in the economics of selling petrol and diesel.
According to Equirus data, petrol marketing margins had fallen to minus ₹4.2 per litre by September 7, from minus ₹2 a week earlier. Diesel margins were around minus ₹24.9 per litre.
Retail prices, meanwhile, have not moved since the May 25 revisions. In Delhi, petrol was ₹102.12 a litre and diesel ₹95.20 as of September 8, according to PPAC.
The margin calculation is affected by more than crude. International petrol and diesel prices, freight, insurance, the rupee and refining margins all play a role. Strong refining margins are currently providing some cushion to integrated oil companies, even as retail fuel margins remain negative.
This is why a $106 crude basket does not automatically mean petrol and diesel prices will rise by a particular amount.
Import Bill Faces New Risk
The bigger concern for India is the cost of bringing oil into the country.
India’s crude import dependence was around 88% in FY2025-26, according to the Petroleum Ministry’s data based on PPAC figures.
That makes the country’s external accounts sensitive to prolonged increases in crude prices. Motilal Oswal has estimated that India’s current account deficit could widen to 1.7% of GDP, or about $71 billion, if crude remains above $90 a barrel for a significant portion of the second half of FY2026-27. That is a scenario estimate rather than a forecast of what will necessarily happen.
The currency is already reflecting some of the pressure. The rupee fell 0.35% to ₹94.8175 per dollar on September 8, its sharpest decline since late July, as Brent moved closer to $100.
What Happens To Fuel Prices
The next question is how long crude stays at these levels.
Earlier this month, industry sources told Moneycontrol that OMCs could broadly absorb crude in the $85-$90 range, helped by strong refining margins. A sustained move above $95-$100, however, could force a rethink on retail fuel pricing.
The Indian crude basket has now moved beyond that range. At the same time, there is no automatic pass-through from the crude basket to pump prices because retail fuel economics depend on refined product prices, taxes, margins, freight, insurance and the exchange rate.
For now, the numbers point to a clear shift: India’s crude cost has risen from $82.04 in July to $106.26 on September 7, while OMC marketing margins have moved deeper into negative territory. Whether this becomes a broader inflation and external-sector problem will depend largely on how long the oil shock lasts.
The Logical Indian’s Perspective
The rise in India’s crude basket highlights how global conflicts can quickly affect domestic economic pressures. With crude costs rising and oil marketing margins coming under strain, the impact could extend beyond fuel companies to businesses and consumers.
Policymakers and oil companies will need to balance price stability with the rising cost of imports. The situation also underlines India’s continued dependence on imported crude and the importance of strengthening energy resilience without placing disproportionate pressure on households.
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