India’s crude oil import basket surged to $120.46 per barrel in October, the highest level since 2012. Geopolitical tensions in West Asia and a weakening rupee are increasing import bills, putting significant pressure on the profit margins of public sector oil companies. The rise has pushed LPG under-recoveries to ₹62,000 crore and is widening the nation's current account deficit.
India’s energy import bill is facing significant pressure as the cost of the crude oil basket rose to $120.46 per barrel by October 26, 2026. This marks the highest price point since March 2012, driven by regional conflict in West Asia. The conflict has caused a sharp increase in marine insurance and global shipping freight rates, adding to the total landed cost of oil for Indian refiners.
Changing logistics are also complicating costs for the industry. Unlike earlier periods where refiners managed some import logistics, the current environment has forced a shift toward buying oil on a delivered basis. This means refiners are paying for the delivery and associated risks upfront, which adds volatility to the cost structure.
Public sector oil marketing companies are feeling the strain on their profit margins. When these companies cannot fully pass on the rising costs of imported crude to consumers, they incur what is known as under-recoveries—the difference between the cost of purchasing and refining the fuel and the price at which it is sold to the public. For Liquefied Petroleum Gas (LPG) alone, these under-recoveries have climbed to ₹62,000 crore. Investors are keeping a close watch on the upcoming quarterly earnings reports from major players like Indian Oil Corporation to see how this margin pressure is affecting their overall financial performance.
Beyond company-specific impacts, the rise in oil prices is affecting the broader economy. The Indian rupee, which is trading near 95 against the US dollar, is making imports more expensive. Analysis from ratings firm ICRA suggests that for every $10 increase in the average barrel price, India’s net oil import bill expands by approximately $12 billion to $13 billion. This directly impacts the country's current account deficit, which is the difference between what the nation earns from exports and what it spends on imports.
For the first half of fiscal year 2027, net oil and gas import bills jumped 35 percent to $81.1 billion. The combination of high global oil prices and a depreciating rupee creates a difficult environment for policymakers and companies alike. Market participants will be monitoring the next set of financial disclosures and government policy updates to understand how these companies manage their debt and cash flow while navigating the current pricing environment.