Oil Relief for India: Crude Basket Averages $59.92 in January, Lowest Since Feb 2021

India’s imported crude oil costs are easing even as international benchmarks rise, with the Indian crude basket averaging $59.92 per barrel so far in January, down from $62.2 in December. This is the first time since February 2021 that the benchmark has stayed below $60, offering potential relief for inflation, the trade deficit and corporate input costs.

Analysts expect this downward trend to last over the medium term, which could shape budgeting, hedging strategies and investment plans for Indian businesses. Lower prices may also influence domestic fuel revisions, as India uses a dynamic daily pricing formula that links petrol and diesel rates to global movements in crude.

Indian crude basket and oil prices outlook

SBI Research, in a report dated 5 January, projected further softness over the next two years. It said, "Indian basket expected to soften in line with expected trends internationally. Our base case is $50 per bbl (barrel) or even lower by June 2026." The report estimated that the Indian crude basket might reach $53.31 per barrel by March, if current patterns persist.

The Indian crude basket measures what Indian refiners actually pay and blends two main streams. Sour grades are represented by an average of Oman and Dubai, while sweet crude is captured through Brent Dated. This mix reflects the grades processed in domestic refineries and is widely tracked by policymakers and corporate planners.

Indian crude basket and oil prices impact on imports

India relies on overseas supplies for about 88% of its crude oil needs, so price shifts quickly affect the import bill. Government estimates show that every $1 per barrel decline in crude reduces annualised oil imports by about ₹13,000 crore. India spent $161 billion on crude imports in the last financial year, highlighting the scale involved.

In the current fiscal, a combination of lower international prices and steeper discounts has already eased the burden. Between April and November, the oil import bill stood at $80.9 billion, compared with $92 billion during the same period a year earlier. This saving supports the rupee, narrows the current account gap and creates room for public and private spending.

Indicator	Period	Value
Indian crude basket average price	December	$62.2 per barrel
Indian crude basket average price	January so far	$59.92 per barrel
Projected Indian basket price	March	$53.31 per barrel
Projected Indian basket price	June 2026 (base case)	$50 per barrel or lower
Crude import bill	Last fiscal year	$161 billion
Crude import bill	Current fiscal till November	$80.9 billion

Indian crude basket and oil prices in global context

The local moderation comes against a backdrop of firming international benchmarks. Brent crude for February delivery recently traded at $62.08 per barrel, up 0.52% from the previous close. West Texas Intermediate was quoted at $58 per barrel, a gain of 0.46%, as traders weighed short-term disruptions against a possible oversupply.

Short-run price support has come from geopolitical worries and supply concerns in specific regions. However, the International Energy Agency expects a surplus later in the decade. The agency has projected that global supply in 2026 will exceed demand by 3.85 million barrels per day, which equals around 4% of world consumption.

Indian crude basket and oil prices: Saudi and OPEC moves

Saudi Arabia’s pricing decisions for Asia have drawn close attention from refiners and analysts. Reports indicate that the kingdom has reduced the price of crude for Asian customers for a third straight month. For February loadings, the official selling price of Arab Light to Asia was set at $0.30 per barrel above the Oman/Dubai average, compared with a premium of $0.60 earlier.

This shift suggests a cautious reading of regional demand trends from one of India’s key suppliers. The pricing of Arab Light often signals Saudi Arabia’s assessment of market conditions in Asia, where refiners compete for margins. Data from oilprice.com showed Arab Light last traded near $60.98 per barrel, broadly aligned with other benchmarks.

Indian crude basket and oil prices forecasts from brokers

Brokerage research indicates that Brent may remain range-bound despite the IEA’s surplus projection. Choice Institutional Brokers stated, "We continue to expect Brent to average at $61.5/b in CY26, as we believe limited additional barrels could enter the market during the current year, resulting in limited downward pressure on oil prices. However, additional barrels from Venezuela may increase supply and weigh on prices beginning next year," underlining the role of future Latin American exports.

The relationship between American and global benchmarks has also shifted. The premium of Brent over WTI has narrowed to about $4 per barrel. This smaller gap changes pricing dynamics for refiners in Asia and Europe that previously favoured cheaper US cargoes when the spread was wider.

Indian crude basket and oil prices: WTI-Brent spread and US crude

Some analysts expect that a tighter Brent-WTI spread could hurt the appeal of US crude in overseas markets. Prashant Vasisht, senior vice president and co-group head, corporate ratings, Icra Ltd, said, "The difference between Brent and WTI has decreased in the recent past. Prices of WTI usually have been lesser given lack of pipelines and transmission capacity in the US. However, as its price comes nearer to that its competitors it may lead to lower demand of the American crude as it would not remain very competitive due to higher logistics cost for importing it," highlighting freight and infrastructure issues.

For Indian refiners, this shift may alter the mix of long-term contracts and spot purchases. If WTI-linked cargoes lose their price edge after including shipping and handling, buyers may lean more on Middle Eastern or African grades. That could, in turn, affect negotiations on discounts and term volumes.

Indian crude basket and oil prices amid Venezuela tensions

Political developments in Venezuela have added another layer of uncertainty to supply projections. Geopolitical risks climbed after American law enforcement agencies captured Venezuelan President Nicolas Maduro from Caracas. US President Donald Trump stated that Washington would effectively administer the oil-producing country and confirmed that the US embargo on all Venezuelan oil remained fully in force.

Venezuela, a member of the Organization of the Petroleum Exporting Countries, holds around 17% of global oil reserves, estimated at roughly 303 billion barrels. However, Mint earlier reported that US involvement is unlikely to trigger a rapid increase in output for world or Indian refiners, due to the long-running production decline in the sanctions-hit Latin American producer.

India previously depended heavily on Venezuelan heavy crude, which suited several complex refineries. At its highest level, India imported more than 400,000 barrels per day from Venezuela before US sanctions were imposed in 2020. Those flows have since reduced, forcing Indian buyers to diversify towards other heavy and medium grades.

For Indian businesses and policymakers, the recent drop in the Indian crude basket offers welcome relief even as global risks stay elevated. The combination of projected softer prices, a high energy import dependence of around 88%, and evolving geopolitics in Venezuela and West Asia will continue to guide fiscal planning, corporate budgeting and fuel pricing decisions through 2026.

FAQs

How have India's imported crude oil costs changed in January compared with December?

The Indian crude basket averages about $59.92 per barrel in January so far, down from $62.2 in December, marking the first time since February 2021 that it stayed below $60.

What is the SBI Research projection for the Indian crude basket price by June 2026?

SBI Research bases its view on a softer trend, with a base case of $50 per barrel or lower by June 2026, potentially around $53.31 per barrel by March if current patterns persist.

What share of India’s crude needs are imported and how do price changes affect the import bill?

India relies on imports for about 88% of its crude needs; a $1 per barrel drop is estimated to reduce annual oil imports by roughly ₹13,000 crore, with last fiscal year’s import bill at about $161 billion.

Which factors besides global benchmarks influence domestic oil prices in India?

Factors include Saudi Arabia’s Asia pricing, such as Arab Light being priced closer to Oman/Dubai, changes in the Brent-WTI spread, and geopolitical tensions like Venezuela, which can affect supply and pricing signals.

What is the IEA's 2026 global supply-demand outlook and its significance for India?

The IEA expects a global supply surplus of about 3.85 million barrels per day in 2026, which could influence price movements and, in turn, domestic budgeting and fuel pricing decisions in India.