India’s crude oil import cost has climbed sharply amid renewed volatility in global energy markets, with the Indian crude basket reaching $99.35 per barrel on September 2, its highest level in three months.
The rise has been driven by escalating tensions in West Asia, particularly the worsening conflict involving the US and Iran, which has increased concerns over crude supply and shipping through the Strait of Hormuz. Brent crude also climbed above $96 a barrel, gaining more than 9% during the week.
The Indian basket subsequently crossed the $100-per-barrel mark, reaching $101.07 on September 4, according to data from the Petroleum Planning and Analysis Cell (PPAC). The September average has also risen sharply from $82 in July and $90 in August.
Higher crude prices pose a significant challenge for India, which imports more than 88% of the crude oil it processes. Rising import costs could widen the trade deficit, put pressure on the rupee and increase inflationary risks.
The pressure is also being felt by state-run oil marketing companies, as higher crude and logistics costs squeeze fuel marketing margins while domestic petrol and diesel prices remain unchanged. Petrol consumption rose 7.9% and diesel demand 6.4% in August, adding to the pressure on refiners and fuel retailers.
With tensions around the Strait of Hormuz continuing to disrupt tanker movements, further increases in India’s crude import costs remain a key risk for the country’s energy bill and broader economic outlook.