Oil Price Transmission Mechanism in India
India imports over 85% of its crude oil requirement, making it highly sensitive to global crude price movements. The impact of oil price increases passes through the economy via multiple channels: (1) direct — fuel prices raise transportation and industrial input costs; (2) indirect — fertiliser and power costs rise, feeding into food inflation; (3) fiscal — if the government caps retail fuel prices, OMCs (oil marketing companies) book under-recoveries, straining public finances; (4) external — higher oil import bill widens the current account deficit, weakening the rupee.
- India's crude oil import dependency: ~87.7% (FY2023-24)
- India's crude import volume: ~5 million barrels per day
- West Asia share of India's crude imports (Feb 2026): ~53% (Iraq, Saudi Arabia, UAE, Kuwait, Qatar)
- Russia's share: ~37% (a diversification option, but subject to logistics constraints via Suez/Cape rerouting)
- Each $10/barrel rise in crude adds approximately 0.3–0.4% of GDP to the oil import bill
● Tracked since March 03, 2026 · last seen June 07, 2026 · updates as the daily brief publishes
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