$108 Brent Crude: India's Economy Under Pressure

Brent crude prices have surged to $108 per barrel, causing concerns for India's economy that relies heavily on imported oil. For India, expensive crude is generally bad news, but the extent of the damage will depend on whether oil stays above $100 for months or if this is a short-lived spike.

The country imports 88.6% of its crude oil requirement between April and January of FY26, and when crude becomes more expensive, India has to spend more dollars to buy the same amount of oil. This can put pressure on the country's trade balance, the rupee, and inflation.

RBI research estimates that a $10-per-barrel oil-price increase can add roughly 49 basis points to headline inflation. Alternatively, if the government absorbs the shock, it could add around 43 basis points to the fiscal deficit.