Indian crude basket forecast at $51.85 by June 2026
Crude oil prices are expected to decline sharply, falling to around $50 per barrel by June 2026, a development that could significantly ease inflationary pressures and keep India’s consumer price index (CPI) inflation well below 3.4 per cent in FY27, according to a report released by SBI Research on Monday.
The report, authored by Dr Soumya Kanti Ghosh, Group Chief Economic Advisor at State Bank of India (SBI), said softer energy prices would also support India’s growth outlook, potentially adding 10–15 basis points to annual GDP growth.
Citing projections by the US Energy Information Administration (EIA), the report noted that Brent crude prices are likely to average $55 per barrel in the first quarter of 2026, primarily due to a sharp buildup in global inventories.
Given that the Indian crude oil basket has a correlation of 0.98 with Brent crude, trends in Brent prices indicate further softening for Indian crude prices as well.
A moving average analysis showed that current Indian crude prices are trading below both the 50-day and 200-day moving averages, signalling the possibility of further downside from the current level of $62.20 per barrel.
According to SBI’s autoregressive quantile forecast, the median (50th percentile) price of the Indian crude basket is expected to fall to $53.31 per barrel by March 2026 and further to $51.85 by June 2026.
The report said the expected decline in crude prices would be transmitted to retail fuel prices through India’s dynamic daily pricing mechanism. Based on historical data from four metro cities, which shows an average correlation of 0.48 between crude prices and retail fuel prices, the fuel component of CPI inflation is likely to moderate further.
SBI Research estimated that a 14 per cent correction in the Indian crude basket in Q4 FY26 could exert downward pressure of about 22 basis points on CPI inflation, assuming a passthrough of 48 per cent. This would keep average CPI inflation in FY27 decisively below 3.4 per cent, the report said.
The report also projected a positive impact on the rupee. Assuming a base USD/INR level of ₹90.28, the expected correction in crude prices could lead to a 3 per cent appreciation in the rupee, taking it to around ₹87.5 per dollar, with part of this appreciation likely to materialise in Q4 FY26.
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