The crude oil prices continue to hover above $103 a barrel while India's crude oil basket has touched $131 per barrel, the highest level since March 2026.
Oil prices above $100 a barrel now for a long time and raise concerns for inflation, economic growth and gold prices in India. Further, the weaker rupee and elevated energy costs could also influence the domestic bullion market, while supply disruptions and freight charges remain key factors for crude oil. Ajit Mishra, SVP, Research at Religare Broking said, "Crude oil prices and rising global bond yields remained the key drivers of market sentiment. Brent crude moved close to $110 per barrel amid continuing Middle East tensions and supply concerns before cooling off towards the $104 mark, while the US 10-year Treasury yield rose above 5%, reaching its highest level since 2007. The combination raised concerns over imported inflation, corporate margins, the rupee and overall growth prospects."
Impact on fuel prices, and inflation:
The sharp rise in the crude prices has not impacted the domestic petrol and diesel prices. On September 20, fuel prices were reported unchanged across major cities, with petrol at Rs 102.12 per litre and diesel at Rs 95.20 per litre in Delhi.
However, a sustained high crude prices can increase the pressure on oil marketing companies. A recent report by ICRA had highlighted that the state-owned fuel retailers were facing negative marketing margins of around Rs 5 per litre on petrol and Rs 23 per litre on diesel as crude moved above $100.
Higher crude prices can feed into inflation through multiple channels as the Petrol and diesel affect transportation costs, while diesel is also widely used to move goods across the country.
India’s retail inflation rose to 4.82% in August from 4.45% in July, while transport inflation increased to 4.60% from 4.43%, according to Reuters.
