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Indian crude basket falls below $80 for first time since October
India's crude basket fell to $72.58, the lowest since October 2023, as slowing Chinese demand and trade tensions erase Middle East risk premia built over the past year.
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The Indian basket of crude oil, a blend of Oman, Dubai and Brent grades tracked by the government, fell to $72.58 a barrel on Wednesday. That is the first time it has traded below $80 since Oct. 1, 2023, before the Israel-Hamas conflict pushed prices higher. The decline from $78.16 a week ago accelerated, wiping out the gains from Middle East risk premia built over the past year.
The basket averaged $84.57 in April and $76.38 in May. June's average settled at $74.08, before July's uptick to $78.35 on renewed tensions. Wednesday's move breached that floor. Data from the Indian Petroleum Ministry show the price is now at its lowest level in over nine months.
The drop is not isolated to India's benchmark. Brent crude, the global benchmark, has also slipped below $80. The trigger is a mix of slowing Chinese demand and growing trade tensions between the United States and China. India imports roughly 85% of its crude requirements, so a lower basket directly cuts the import bill. The government's subsidy outlays on LPG and kerosene ease with cheaper crude. Retail fuel prices, which have been frozen for months, may face downward pressure if the decline continues.
Yet the read-through for India is not straightforward. Lower crude helps the current account deficit and imported inflation. It also reflects weaker demand, which can hurt exports. State-owned refiners such as BPCL and HPCL see their gross refining margins compress when crude falls faster than product cracks. Inventory valuation losses also weigh if crude keeps sliding. On the marketing side, lower crude reduces working capital needs. That benefit is temporary if prices rebound.