Prices had been on a declining trend for most of the past year, the ministry noted.
Speaking in the Lok Sabha, FinMin said the Crude Oil FOB Price (Indian Basket) jumped from $69.01 per barrel at the end of February to $80.16 per barrel by March 2, 2026, after tensions escalated in the Middle East.
“Given that India’s inflation is near the lower bound, the impact on prices is not expected to be substantial at this point,” the ministry added.
Citing the Reserve Bank of India’s Monetary Policy Report released in October 2025, FinMin said the central bank had projected that a 10% rise in crude prices, assuming full pass-through, could push inflation up by 30 basis points.
The ministry highlighted that the medium-term effect would depend on exchange rate movements, global supply and demand dynamics, monetary policy transmission, overall inflation trends, and indirect pass-through to domestic prices.
India remains highly sensitive to oil price fluctuations, importing over 85% of its crude, with a significant portion sourced from the Middle East. Sustained crude above $80 per barrel can widen the current account deficit, weigh on the rupee, and increase costs for sectors such as aviation, chemicals, and automobiles.
Economists estimate that a $10-per-barrel rise in crude could cut about 0.5% from GDP growth while substantially raising the annual oil import bill.
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Amid escalating tensions and restricted traffic through the Strait of Hormuz,
Indian markets responded sharply on March 9, with the BSE Sensex and Nifty 50 falling more than 3% intraday, marking their sixth-largest single-day drop in absolute terms.
