India faces a higher oil import bill as international crude prices surged, with Brent nearing USD 100 a barrel amid rising tensions in West Asia that threaten supply routes. Brent traded near USD 99 while US West Texas Intermediate was around USD 94, elevating concern for an economy that imports over 88 per cent of its crude. The reliance on seaborne oil leaves the country exposed to swings in global energy costs.

A sustained increase in crude would raise the dollar-denominated import bill and put pressure on the rupee and the trade balance, while higher international prices can feed into domestic inflation through fuel, transport and other energy-related costs. Retail petrol and diesel prices have been frozen for more than three months after the last revision on May 25, when petrol was raised by Rs 2.61 a litre and diesel by Rs 2.71 a litre.

Fuel distributors have absorbed part of the cost rise, compressing marketing margins and weighing on profitability at major retailers. India’s crude oil import bill surged by over 56 per cent in April–July to USD 63.4 billion (bn) from USD 40.5 billion in the same period last year, according to the Petroleum Planning and Analysis Cell. Volumes were almost unchanged at 81.9 million (mn) tonnes in the first five months of the fiscal year, compared with 81.5 million (mn) tonnes last year.

Traffic through the Strait of Hormuz has slowed sharply, reducing West Asian shipments from roughly 18 million (mn) barrels a day to about 11 million (mn) barrels a day and altering regional supply dynamics. Analysis suggests Asia Pacific oil demand will remain below pre-conflict levels until late 2027 after a projected decline of 1.24 million (mn) barrels per day in 2026, and extended hostilities would further tighten markets. For India a prolonged period of elevated crude would pose greater challenges for inflation, the current account and the currency.