New Delhi – India achieved a significant economic milestone as the India crude oil import cost fell below $60 per barrel on Monday, marking one of the lowest levels in five years. This development comes despite global geopolitical upheavals and sanctions against three major crude oil suppliers—Iran, Russia, and Venezuela.
Historic Price Decline in India Crude Oil Import Cost
The India crude oil import cost reached $59.29 per barrel on January 5, as measured by the daily average price of various crude grades known as the Indian basket. This represents the first time the India crude oil import cost has dipped below $60 since February 5, 2021, when it stood at $59.34 per barrel.
The Indian basket of crude oil represents a carefully balanced cocktail of sour grade and sweet grade crude oil processed in Indian refineries. This benchmark provides an accurate reflection of the actual India crude oil import cost paid by the nation’s energy sector.
Future Projections and Expert Forecasts
Economic forecasts suggest the India crude oil import cost will continue declining throughout 2026. A research report prepared by State Bank of India predicted that crude oil prices would “soften significantly in 2026” to reach $50 per barrel by June 2026. These projections indicate sustained relief for India’s energy expenditure in the coming months.
The US Energy Information Administration has also forecasted favorable trends for the India crude oil import cost. According to EIA’s short-term energy outlook published on December 9, 2025, Brent crude oil prices are expected to fall to an average of $55 per barrel in the first quarter of 2026 and remain near that level throughout the year.
Substantial Financial Savings
The declining India crude oil import cost has generated substantial financial benefits for the nation. The fall in international oil prices has impacted India’s crude oil import bill significantly, saving approximately $11 billion on an annualized basis during the first eight months of the current financial year (April-November 2025-26).
This reduction in the India crude oil import cost occurred even as the nation’s incoming crude shipments surged. According to the Petroleum Planning and Analysis Cell, India’s imports of crude oil increased 2.44 percent to 163.4 million metric tonnes in April-November 2025 from 159.5 MMT in the same period the previous fiscal year.
Import Bill Reduction Despite Volume Increase
The India crude oil import cost advantage is best illustrated through value comparisons. In value terms, the crude oil import bill fell approximately 12 percent to $80.9 billion in April-November 2025 compared to $91.9 billion during April-November 2024. This demonstrates how price reductions offset volume increases, delivering net financial benefits.
After peaking at approximately $71 per barrel in July 2025, the India crude oil import cost began softening. The falling trend became more pronounced during the third quarter (October-December 2025). In December 2025, the monthly average crude oil price for the Indian basket fell to a 58-month low of $62.2 per barrel.
Sanctions Impact on Supply Sources
The reduced India crude oil import cost achievement is particularly noteworthy given sanctions against three major crude oil producers. The United States has embargoed purchases of cheaper and discounted crude oil from Iran, Russia, and Venezuela, traditionally important sources for India’s energy needs.
Sector experts and industry executives confirmed that India completely stopped importing Iranian crude oil several years ago. Imports from Venezuela remain miniscule, while Indian refiners stopped purchasing Russian crude from mid-November. Some ships may remain in transit and some cargoes already purchased from non-sanctioned entities continue arriving, but the flow has essentially ceased.
Economic Implications and Currency Impact
The declining India crude oil import cost carries broader economic implications beyond immediate savings. Since oil prices constitute the largest component in India’s import basket and cannot be substituted with domestic production in the short term, contraction of the import bill significantly impacts the rupee.
SBI Group Chief Economic Advisor Soumya Kanti Ghosh’s analysis using recent history suggests substantial currency appreciation potential. Assuming a USD/INR base price of ₹90.28, the expected 14 percent correction in the India crude oil import cost may result in approximately 3 percent rupee appreciation, reaching approximately ₹87.5 per dollar. A portion of this currency appreciation could materialize in the fourth quarter of fiscal year 2026.
Long-term Outlook
The India crude oil import cost trends suggest continued favorable conditions through fiscal year 2027. The SBI report noted that “internal crude oil prices expected to soften, agnostic to recent geopolitical events,” indicating structural factors beyond temporary disruptions drive these trends.
Other factors remaining constant, the appreciation trend in the rupee is expected to continue into fiscal year 2027 as well, providing sustained economic benefits from the reduced India crude oil import cost.
Strategic Advantage for India
The falling India crude oil import cost provides strategic advantages for a nation that imports more than 88 percent of the crude oil it processes. This dependence makes India particularly vulnerable to oil price fluctuations, making current price levels especially beneficial for economic stability and growth.
Conclusion
The India crude oil import cost falling below $60 per barrel represents a significant economic development offering substantial financial savings and broader macroeconomic benefits. With forecasts suggesting continued softening through 2026, India stands positioned to capitalize on favorable energy market conditions despite global geopolitical complexities and supply chain disruptions.
