Costlier Oil, Shifting Suppliers Cloud India's Economic Outlook

Key Takeaways

• 1.India is pivoting crude imports away from Russia back to the Middle East due to the threat of 100% US tariffs under the new Graham Sanctioning law and heavy Chinese buying.
• 2.India's crude import basket surged to an average of US$116/bbl in September, reaching its highest level since June 2022 and worsening pressure on the rupee, inflation, and growth.
• 3.The RBI is expected to delay rate hikes until December, with any tightening cycle expected to remain shallow given that core inflation is contained.

Table of Contents

• Indian oil basket tilts toward the Middle East as Russian buying falls
• India returned to Russian oil on US waivers after outbreak of Iran war
• India's crude basket in September averaged US$116/bbl – the highest monthly average since June 2022
• Finance Ministry flags rising price pressures although core inflation contained
• We still expect the RBI to raise rates only in December, and even if it starts tightening next week, the cycle will likely be shallow

Report data

Price of retail petrol vs crude oil import basket