Brent crude nears USD 97, may cross USD 100; Every USD 10 rise could widen India's CAD by USD 20 bn: Experts
New Delhi, July 23
As Brent crude neared USD 97 per barrel on Thursday, with an increased likelihood of crossing the USD 100-per-barrel mark as seen in March, India's current account deficit is expected to widen, while inflation could increase to 4.1 per cent, according to analysts.
Brent crude was trading at around USD 95.91 per barrel while crude oil was trading at around USD 88.06 per barrel at the time of reporting.
As per market analyst Ajay Bagga, the continued crude oil and gas disruptions with elevated geopolitical risk is overlaying a recovery in the chips and AI trade.
He said, "With Brent at USD 96, and with Houthi's striking Saudi tankers in the Red Sea , oil prices seem headed to USD 100, stressing "Peace hopes have reduced as Marco Rubio said the Iranians are not interested in peace."
On the other hand, Manoranjan Sharma, Chief Economist, Infomerics Valuation and Rating Limited noted, "Brent crude has already crossed USD 100/barrel in early March 2026 and could remain at or above this level in the near term."
He further highlighted major forecasters, including Goldman Sachs, see prices remaining above USD 100 and up to USD 120 through 2026, if Hormuz disruptions persist, however, as per Sharma, the outlook is uncertain.
He further noted, escalation in West Asia and continued OPEC+ supply discipline poses upside risks, while demand destruction, a global slowdown and coordinated strategic petroleum reserve releases could limit the rise.
Noting India imports nearly 85-90 per cent of its crude requirement is particularly vulnerable to sustained oil prices above USD 100, he said,
"Including freight and war-risk premia, its effective cost could be USD 115/barrel.
Accordingly, India's import bill will increase and current account deficit will widen which will further push the Rupee downwards.
"If crude averages USD 100 for a year, GDP growth could fall to 6.6 per cent and inflation rise to 4.1 per cent. Every USD 10/barrel increase could add nearly USD 20 billion--around 0.5 per cent of GDP--to the CAD and shave 15-50 basis points off growth. Higher oil prices would also strain fiscal balances, compress corporate margins and delay an earnings recovery," he noted.
— ANI
Reader Comments
Here we go again. Geopolitical tensions always hit India the hardest because we import 85% of our oil. Why can't we fast-track renewable energy and electric vehicles? We keep talking about it, but implementation is slow. Every $10 rise adds $20 billion to CAD—that's money that should be spent on infrastructure and health.
From an investor's perspective, this is a double-edged sword. Yes, CAD widens and GDP growth could dip to 6.6%, but some oil PSU stocks might rally if the government raises prices. However, the broader market sentiment will suffer. I'm reducing my exposure to auto and aviation sectors for now.
I run a small transport business, and this news gives me sleepless nights. Fuel is already 40% of my operating cost. If oil hits $100, I'll have to raise fares for my fleet of vans, but customers will complain. The government should consider reducing excise duty on diesel like they did in 2022. 😔
The article mentions GDP could fall to 6.6% and inflation rise to 4.1%. But 4.1% doesn't sound too high compared to last year's spike. The real concern is the CAD—$20 billion more deficit means rupee will weaken further. Importers like me are already suffering. We need strategic reserves and better hedging policies.
Every time oil prices rise, I remember how much we rely on imports. It's 2025 and we still haven't achieved energy independence. Yes, renewables are growing, but we need nuclear and domestic production
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