What's Happening with Global Oil Prices?
Global crude oil markets are currently in a state of flux. After a period of relative calm, prices have become choppy, with the benchmark Brent crude hovering above the psychological mark of $100 per barrel for much of September before seeing some decline.
On September 21, crude oil was trading around $98 per barrel. This volatility is driven by a complex mix of geopolitical tensions in the Middle East, which threaten key shipping routes like the Strait of Hormuz, and shifting forecasts for global demand. According to the International Energy Agency (IEA), disruptions have tightened the market, even as overall global oil demand for 2026 is forecast to decline. This push-and-pull between supply risks and demand concerns creates an unpredictable environment, with every dollar change in price having significant global consequences.
How This Affects You at the Pump
For the average Indian, the most immediate impact is felt at the petrol pump. India imports over 85% of its crude oil, making it highly vulnerable to global price swings. When global prices rise, the cost for Indian Oil Marketing Companies (OMCs) to import and refine crude also increases. However, you may not see this reflected in daily prices immediately. As of September 21, petrol and diesel prices across major cities like Delhi and Mumbai have remained largely steady. For instance, petrol in Delhi was around ₹102 per litre. This stability is often because state-owned OMCs absorb the initial shock, leading to losses. Experts note that these companies are currently losing about ₹5 per litre on petrol and a staggering ₹20 on diesel. While this cushions consumers in the short term, it is not sustainable. If high international prices persist, a hike in retail fuel prices becomes almost inevitable to cover these mounting losses.
Bracing for Pricier Festive Travel
The upcoming festive and holiday season, a peak time for travel in India, is likely to see a direct hit from higher fuel costs. The primary casualty will be airfares. Aviation Turbine Fuel (ATF), or jet fuel, is a direct derivative of crude oil and constitutes 35-40% of an airline's operating expenses. OMCs increased ATF prices by 5.46% on September 1, the second consecutive monthly hike, putting airlines under immense pressure. In response, carriers may pass this burden to passengers. Analysts predict that if crude remains over $100 a barrel, international airfares could rise by 5% to 20%, with long-haul routes seeing the sharpest increases. Some airlines have already started revising their fuel surcharges, adding a distance-based fee to each ticket, which could range from a few hundred to several thousand rupees depending on the route. This means that booking flights for Diwali or year-end holidays could soon become noticeably more expensive.
The Ripple Effect on Everyday Goods
The impact of crude oil doesn't stop at personal vehicles and planes. Diesel is the lifeblood of India's logistics network, powering the trucks that transport everything from fresh produce to electronics across the country. An increase in the price of diesel directly translates to higher transportation costs for businesses. These costs are often passed down the supply chain, eventually reaching the consumer in the form of higher prices for everyday goods and services. A sustained period of expensive fuel can trigger broader inflationary pressures, affecting household budgets far beyond the fuel bill. According to an RBI estimate, a $10 per barrel rise in oil prices can increase headline inflation by nearly 0.5%. This means that from your grocery bill to the cost of manufactured products, the price you pay is indirectly linked to the volatile world of global oil.
